WASHINGTON — Sen. Rand Paul, R-Ky., revealed Wednesday that his wife bought stock in Gilead Sciences — which makes an antiviral drug used to treat COVID-19 — on Feb. 26, 2020, before the threat from the coronavirus was fully understood by the public and before it was classified as a pandemic by the World Health Organization.
The disclosure, in a filing with the Senate, came 16 months after the 45-day reporting deadline set forth in the Stock Act, which is designed to combat insider trading.
The investment, but especially the delayed reporting of it, alarmed experts in corporate and securities law, who said it undermined trust in government and raised questions about whether Paul’s family had profited from nonpublic information about the looming health emergency and plans by the U.S. government to combat it. Several senators sold large amounts of stocks in January or February of last year, prompting a handful of insider trading probes. Most of those investigations concluded last spring, according to notifications from the Justice Department to lawmakers under scrutiny.
“The senator ought to have an explanation for the trade and, more importantly, why it took him almost a year-and-a-half to discover it from his wife,” said James Cox, a professor of law at Duke University. “Did she give him a new birthday gift of a Mercedes, and he all of a sudden said, ‘Where did this money come from?'”
Kelsey Cooper, a spokeswoman for Paul, said the senator completed a reporting form for his wife’s investment last year, but learned only recently, while preparing an annual disclosure, that the form had not been transmitted. He sought guidance from the Senate Ethics Committee, she said, and filed the supplemental report along with an annual disclosure Wednesday.
She also said Paul’s wife, Kelley, who is an author and former communications consultant, lost money on the investment, which she made with her own earnings. The purchase was of between $1,000 and $15,000 of stock in Gilead, which makes the antiviral drug known as remdesivir.
The drug was initially invented as a hepatitis C drug a decade ago and tested for possible use against other infectious diseases, such as Ebola. Remdesivir gained emergency use authorization from the Food and Drug Administration in May of last year and was administered to then-President Donald Trump when he was sick with the virus in October, before it gained full approval. Results of a WHO-sponsored study released later that month raised doubts about the drug’s effectiveness, prompting the agency to reverse itself and recommend against its use as a treatment for COVID-19. The drug brought in $2.8 billion for Gilead last year.
Though the size of the trade was small, said Joshua Mitts, an expert in securities law at Columbia University, it nonetheless “may have exploited knowledge of the impending pandemic.” Remdesivir was backed on Feb. 24, 2020 — two days before the purchase — by a WHO assistant director general, who described it as the only known drug that “may have real efficacy” in treating the novel virus.
The existence of public information causing Gilead’s stock to rise, Mitts said, doesn’t rule out the possibility that the purchase was built on additional knowledge delivered to the senator in private. Paul is a member of the Senate health committee, which in January hosted Trump administration officials for a briefing on the novel virus.
“What had already been revealed about its efficacy profile certainly weighs in her favor, but not everything about the product was necessarily clear from existing announcements,” Mitts said. “There could have been information about interest that certain individuals within administration may have had in the product, or that hospitals here in the U.S. were already loading up.”
Cooper, Paul’s spokeswoman, said the senator attended no briefings on COVID-19. Eight days after his wife invested in the company behind the antiviral thought to be effective against COVID-19, Paul cast the lone vote in the Senate against $8.3 billion in emergency spending to combat the emerging outbreak.
Jordan Libowitz, communications director for the watchdog group Citizens for Responsibility and Ethics in Washington, D.C., said the flurry of media reports about possible insider trading by members of Congress during the reporting window for his wife’s purchase should have made the senator all the more attentive to disclosure rules.
“One would think he would make sure all of his reporting was on the up and up,” Libowitz said.
Paul, an ophthalmologist who became the first U.S. senator to test positive for the virus in March 2020, has since clashed with federal health authorities over masks and other tools to mitigate spread of the virus.
The Washington Post’s Tony Romm contributed to this report.