The allegation that some US senators, including Richard Burr and Kelly Loeffler, selling equities in February 2020 might have taken advantage of political intelligence around the coronavirus pandemic crisis has highlighted a risk for hedge fund managers: political insider trading. In March 2020, the US Securities and Exchange Commission (SEC) took the opportunity to reiterate the need for vigilance in this area, having previously stated the importance of this in relation to certain investigations and actions. The potential scope of political insider trading is broad in terms of: the types of information covered; the regulatory and justice bodies involved in enforcement; the markets and instruments traded; and the legal basis for bringing actions.

Since the 2012 Stop Trading on Congressional Knowledge Act (STOCK Act) – which Richard Burr and just two other senators voted against – it has been clear that various US laws used to prosecute insider trading potentially apply to US politicians, and also to any confidential information they may share with third parties, including asset managers.