WASHINGTON ― Rep. Tom Price (R-Ga.), President-elect Donald Trump’s nominee to head the Department of Health and Human Services, admitted on Wednesday that he decided to buy stock in an Australian biotech firm after receiving information from Rep. Chris Collins (R-N.Y.), a board member of that company.
Price’s admission that he personally chose to purchase stock in Innate Immunotherapeutics contradicts the Trump transition team’s defense of another questionable stock trade Price made. The transition team had previously said Price held a broker-operated account with Morgan Stanley and did not direct his stock trades.
“Dr. Price’s Morgan Stanley financial advisor designed his portfolio and directed all trades in the account,” read a fact sheet the transition team put out on Tuesday. “Pursuant to the arrangement with Morgan Stanley, the financial advisor, and not Dr. Price, has the discretion to decide which securities to buy and sell in his account.”
The transition team’s defense that Price did not direct his stock trades was in response to a CNN report that the congressman bought stock in Zimmer Biomet before introducing legislation specifically targeted to help the company.
Price’s testimony shows that he does indeed involve himself in the purchase and sale of his own stocks, at least when it came to Innate Immunotherapeutics. Trump transition spokesman Phillip Blando said in an email that Price asked his Morgan Stanley broker to open “an account separate from his primary broker-directed account at Morgan Stanley in order to make the purchase.”
Blando added in an email after the publication of this article that “the operative phrasing” in the fact sheet defending Price’s stock trades is that the broker “directed all trades in the account.” He added, “The Australian drug company was not part of that account.”
It is not clear whether Price had other accounts, but his financial disclosures indicate that none of his accounts are blind trusts ― that is, he has power to direct trades on any or all of them. Price is also required to file an annual statement saying he knows what stock or other assets he holds or trades. Price had assured the transition team that he did not direct any of his own stock trades, a person involved in the transition told The Huffington Post. Price has agreed to divest of all his stock holdings upon confirmation.
Under questioning by Sen. Patty Murray (D-Wash.), the ranking Democrat on the Senate Health, Education & Labor Committee, Price denied that he had received nonpublic information, but asserted that he decided to purchase stock in Innate Immunotherapeutics after hearing from Collins.
“[Collins] talked about the company and the work they were doing in trying to solve the challenge of progressive secondary multiple sclerosis,” Price said. “I studied the company for a period of time and felt it had significant merit and purchased the initial shares on the stock exchange.”
Ethics experts stated that Price could be in violation of the STOCK Act, a bipartisan 2012 law that bans insider trading by members of Congress, if he received nonpublic information from Collins or others prior to purchasing Innate Immunotherapeutics shares.
Norm Eisen, the former top ethics adviser to President Barack Obama, said, “I think it raises very serious questions under the STOCK Act and the House Ethics rules. I think that we need to know what was said in those communications.”
“This is another example of something that needs to be further investigated,” said Larry Noble, a lawyer with the Campaign Legal Center and former general counsel to the Federal Election Commission. “He himself has now said something that raises the question of whether he has violated the STOCK Act.”
“Public information doesn’t mean that one other person knows,” he added.
“The ethics concerns keep growing and that is why they need to be investigated and resolved,” said John Kraus, press secretary for Sen. Tammy Baldwin (D-Wis.). Baldwin, along with Sens. Elizabeth Warren (D-Mass.) and Al Franken (D-Minn.), has written a letter to Price asking for more information about the Innate Immunotherapeutics trade.
“He himself has now said something that raises the question of whether he has violated the STOCK Act.”
- Larry Noble, former general counsel to the Federal Election Commission
Price’s answer about when he decided to buy stock in Innate Immunotherapeutics came in response to a back-and-forth in which Murray recounted a private conversation she had had with the congressman.
“You made the decision to purchase that stock, not a broker. Yes or no?” Murray asked at Price’s confirmation hearing.
“That was a decision that I made, yes,” Price said.
“You were offered an opportunity to purchase stock at a lower price than was available to the general public,” Murray said. “Yes or no?”
“I don’t know that it was,” Price responded. “It was the same price that everybody paid for the private placement offering.”
“Well, Congressman Chris Collins, who sits on President-elect Trump’s transition team, is both an investor and a board member of the company,” Murray said. “He was reportedly overheard just last week off the House floor bragging about how he had made people millionaires from a stock tip. Congressman Price, in our meeting, you informed me you made these purchases based on conversations with Representative Collins. Is that correct?”
“No, what I ―” Price started.
Murray interjected, “That is what you said to me in my office.”
Price responded, “What I believe I said to you was I learned of the company from Congressman Collins.”
“What I recall from our conversation was that you had a conversation with Collins and then decided to purchase the stock,” Murray said.
“No, that’s not true,” Price replied.
Murray pressed forward. “Well, that is what I remember hearing you say in my office,” she said. “In a conversation, did Representative Collins tell you anything that could be considered, quote, a stock tip? Yes or no?”
“I don’t believe so, no,” Price said.
Murray continued, “Well, if you are telling me he gave you information about a company, you were offered shares in the company at prices not available to the public, you bought those shares, is that not a stock tip?”
This is where Price explained that Collins told him about the company, but that he purchased stock after doing his own research. He said he participated in the private placement of stock in August.
Price’s participation in a private placement of stock by Innate Immunotherapeutics was first reported by Kaiser Health News last week. The congressman’s largest purchase of Innate Immunotherapeutics stock was between $50,001 and $100,000 during the company’s private placement on Aug. 31, 2016.
Murray further questioned Price on whether he thought it was appropriate for members of Congress to be trading stocks that could benefit from legislation under consideration, adding that the 21st Century Cures Act had numerous provisions that would benefit Innate Immunotherapeutics.
“Do you believe it is appropriate for a senior member of Congress actively involved in policy making in the health sector to repeatedly personally invest in a drug company that could benefit from those actions?” Murray asked. “Yes or no?”
“That’s not what happened,” Price said.
This article has been updated to include a statement Phillip Blando sent to The Huffington Post after its initial publication.