If you look at this story by CNN about Representative Tom Price, it makes the incident look like some convoluted insider-trading scheme where Tom Pricey profited handsomely by proposing legislation to benefit a health care company he invested in just a week before.
Rep. Tom Price last year purchased shares in a medical device manufacturer days before introducing legislation that would have directly benefited the company, raising new ethics concerns for President-elect Donald Trump’s nominee for Health and Human Services secretary.
Price bought between $1,001 to $15,000 worth of shares last March in Zimmer Biomet, according to House records reviewed by CNN.
Less than a week after the transaction, the Georgia Republican congressman introduced the HIP Act, legislation that would have delayed until 2018 a Centers for Medicare and Medicaid Services (CMS) regulation that industry analysts warned would significantly hurt Zimmer Biomet financially once fully implemented.
If you watch the accompanying video, Erin Burnett says the timeline of all this “this raises significant questions” to which Manu Raju replies, “Indeed it does Erin.”
I will break this down.
First, do you know how many shares Price purchased (more on that in a moment)? Twenty-six. I was awarded more shares of Home Depot stock each year when I worked there than this. If Tom Price was trying to make a quick buck, this certainly was not the way to go about it. If thousands of shares were purchased, I could see raising a stink about it but twenty-six shares? Stop.
Second, the idea that Tom Price bought the stock and was immediately opposed to Centers for Medicare and Medicaid Services (CMS) regulation is incorrect. CNN failed to note; Representative Price was on record in September of 2015 being opposed to the rule. A letter addressed to Andrew Slavitt, the acting administrator for CMS and Dr. Patrick Conway, Chief Medical Officer for CMS is dated September 21, 2015. Scroll to the bottom, and the first signature you’ll see is Tom Price, MD.
Finally, Representative Price, like many people, have financial advisors who are given the discretion to make investments, including stock purchases and sales on their behalf. That is what happened in this case. Dr. Price’s Morgan Stanley financial advisor directed all trades in the account. This particular investment was part of what is known as a rebalancing of a portfolio. It happens all the time to provide the widest investment diversification as possible to alleviate risk.
This is a story that is attempting to create a scandal where one does not exist. It’s a perfect example of lazy reporting.