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.
Experts in corporate and securities law said the investment, and especially the delayed reporting of it, undermined trust in government and raised questions about whether the Kentucky Republican’s family had sought to profit 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 in the spring of 2020, 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 D. Cox, a professor of law at Duke University.
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 Wednesday along with the annual disclosure, which was due in May and submitted three months late.
She also said Paul’s wife, Kelley, 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 company’s stock was worth $74.70 per share on the day of the purchase and rose above $80 in March. It has since fluctuated and was worth $69.84 on the day of Paul’s disclosure more than a year later.
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 2020 and was administered to President Donald Trump when he was sick with covid-19 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 international agency to recommend against its use as a treatment for covid-19.
That marked a reversal from its original position, laid out on Feb. 24, 2020 — two days before Kelley Paul’s purchase — by a WHO assistant director general, who described remdesivir as the only known drug that “may have real efficacy” in treating the novel virus. The National Institutes of Health began a clinical trial the next day. The drug brought in $2.8 billion for Gilead last year.
The existence of public information causing Gilead’s stock to rise, said Joshua Mitts, an expert in securities law at Columbia University, doesn’t rule out the possibility that the senator gained additional knowledge in private. Paul is a member of the Senate health committee, which in January hosted Trump administration officials for a briefing on the coronavirus.
“Not everything about the product was necessarily clear from existing announcements,” Mitts said. “There could have been information about interest that certain individuals within the administration may have had in the product, or that hospitals here in the U.S. were already loading up.”
Cooper said the senator attended no briefings on covid-19. Eight days after his wife invested in the company behind the antiviral drug 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, 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 in March 2020 became the first U.S. senator to test positive for the virus, has since clashed with federal health authorities over masks and other tools to mitigate spread of the virus.
Tony Romm contributed to this report.