On March 19th, 2020 federal disclosure documents demonstrated that Loeffler and her husband Jeffrey Sprecher, CEO, Intercontinental Exchange (the parent company of the NYSE) liquidated securities with an aggregate value of several million dollars. According to the report, the selling began on January 24th, the same day she attended a private briefing on the severity of the spread of COVID-19 by the committee on health, education, labor, and pensions. Between 24, January and 14, February, the couple sold 27 stocks valued between $1.2 million dollars and $3.1 million and bought stocks valued between $450,000 and $1 million. Additionally, Sprecher sold at least $18 million dollars worth of ICE stock.
The liberal “watchdog” group Common Cause filed a complaint against the couple alleging potential abuse including possible violations of the STOCK Act and insider trading laws. In reaction, the couple sold the securities they purchased. Shortly thereafter the senate ethics committee dismissed the claims, stating, quite clearly “Based on all the information before it, the committee determined that your actions have not violated the law, Senate rules, or standards of conduct.”
When you examine the world Ms. Loeffler and her husband live in, it is almost impossible to commit insider trading even if one is so inclined. They are both deemed “Politically Exposed Persons” by every securities exchange, the Securities exchange committee, and the financial industry’s self-regulatory organization, FINRA. This means that they are subject to significantly enhanced due diligence and oversight. It is unlikely that a full-service broker-dealer would allow them any form of discretion over their portfolio, preferring to run it instead, as advisors on behalf of the family. Additionally, Mr. Sprecher is subject to trading restrictions both on his ICE shares, and his person as an executive of the company under Rule 144, and a brief search indeed reveals that any and all selling of ICE he did was performed under the affirmative defense of Rule 10b5-1 trading plan, which would make insider sales impossible. This was above board and legal.
A far more plausible scenario than insider trading with the rest of their portfolio is that their advisor engaged in a periodic rebalancing as prescribed by their investment policy statement and the couple were not even aware of the transactions. Keeping in mind that their entire portfolio is worth more than $800 million dollars, $3 million dollars in her portfolio is more or less a rounding error, and given that it was diversified among 27 different stocks there is no basis to form a complaint except to harass them.
I encourage anyone curious to spend some time reviewing the scrutiny Politically Exposed Persons have been subject to since the adoption of the Patriot Act. Here is a useful jumping-off point