Blum’s Timed Stock Sale Raises Ethical Questions in Political Finance

The sale by Richard C. Blum on January 31, 2020 of $500,001 to $1 million worth of Allogene Therapeutics stock came when the price was hovering around $21.28—a near‐bottom level for ALLO ahead of the next trading day’s intraday low of $21.25. This timing, during a broadly weak biotech sector preceding the COVID-19 crash in late February, brought scrutiny given Feinstein’s position and expectations that political figures avoid even the appearance of insider trading. Yet, two mitigating factors emerge.

First, the disclosure indicates that Sen. Feinstein had “no involvement whatsoever” in her husband’s investment decisions beyond what is required by the Senate’s reporting rules. Second, the sale was formally compliant with the rules: it was disclosed via required filings and occurred at or near the market lows, rather than selling at peaks, which weakens arguments that the transaction was based on nonpublic negative information.

However, the sale still raises strategic risks and questions for political figures:

1. Reputation and optics: Even a legal transaction can generate public distrust, especially when partnered with future rises in stock price—ALLO did climb above that level after the sale.
2. Regulatory and investigative scrutiny: This trade falls among others disclosed in early 2020 that have been reviewed under congressional rules and by external investigations. While no charges were filed in investigations of senators’ stock trades tied to early COVID-19 briefings, such events point to gaps or tensions in disclosure requirements.
3. Disclosure regime effectiveness: Competitive pressures in biotech can reward those who act early; public trust depends on not only transparency but also perceived fairness. The timing—selling at lows—reduces but does not eliminate doubts about nonpublic information.
4. Analyst divergence: By late February 2020, at least one analyst firm (Raymond James) projected a substantial upside, assigning a $40 target to ALLO, more than 80% above price at time of sale. That implies institutional belief that the market or the company had untapped positive catalysts, making the timing of a sale more consequential in hindsight.

From an investor banking perspective, lessons from this case are: ensure legal compliance is paired with proactive communication; understand how political or personal transactions can ripple through reputation risk; and monitor how markets, analysts, and regulatory bodies react—not just whether rules were technically followed. Open questions remain about what, if any, nonpublic information might have been available at the time, and how disclosure norms could be strengthened.