In his agreement with Morgan Stanley Tom Price could still tell the broker when to sell a share. | Getty Price had the power to sell his healthcare stock The HHS nominee’s agreement with his stockbroker appears to contradict the Trump transition’s defense of his trades.

Health secretary-designate Tom Price’s allies are blaming his stockbroker for buying a stock that stood to gain from a bill Price introduced in the U.S. House. But new details show Price had the ability to tell the broker to sell the stock.

The text of Price’s agreement with the broker at Morgan Stanley, provided to POLITICO by a Price spokesman, gives the broker discretion to make trades without Price’s input. But it also makes clear that Price could still tell the broker when to sell a share.


“Your Financial Advisor, and not you, has the discretion to decide what securities to buy and sell in your account,” the agreement says. “This discretion is subject to the parameters described below and your ability to direct a sale of any security for tax or other reasons.”

It goes on: “Your Financial Advisor manages your [Portfolio Management] account in light of information you provide about your investment objectives and financial situation. Your Financial Advisor is primarily responsible for making and implementing investment management decisions for your account within the PM program’s investment guidelines.”

The fine print undercuts the transition’s efforts to defend Price by insisting he had no control over his investment in a medical device company that was made shortly before he introduced legislation to curb costly regulations on the types of products the company sells.

At his confirmation hearing Wednesday, Price told senators he was not involved in that transaction.

“The stock was bought by a broker who was making those decisions,” Price said. “I wasn’t making those decisions.”

But the revelation that Price had both knowledge of the investment and the ability to sell stocks in his portfolio is likely to embolden Democrats who are suspicious of the timing of his investment in a company called Zimmer Biomet.

“This is not just a stockbroker, someone you pay to handle the paperwork,” Sen. Elizabeth Warren (D-Mass.) said at the hearing. “This is someone who buys stock at your direction. This is someone who buys and sells the stock you want them to buy and sell.”

“Not true,” Price protested.

“Because you decide not to tell them, wink wink, nod nod, and we’re all supposed to believe you?” Warren said.

The stock in Zimmer Biomet was purchased on March 17 through the Morgan Stanley brokerage account, along with 50 other trades, according to Price’s transaction report filed to the House clerk. The transaction report says Price was notified of the purchase on April 4. Less than two weeks earlier, on March 23, Price had introduced a bill called the HIP act to block regulations on hip and knee replacements like the ones Zimmer Biomet sells.

Even if the broker bought the stock without Price’s knowledge, he did not instruct the broker to sell it after becoming aware of the conflict of interest, even though his agreement with Morgan Stanley explicitly says he would have been able to.

“What I don’t understand is, when you found out your broker bought it, you kept the stock,” Sen. Al Franken (D-Minn.) said at the hearing.

Under the investment agreement, Price also could have told his broker to avoid healthcare stocks or other investments that could conflict with his service on the House Ways and Means Committee’s health subcommittee. But Price apparently gave no such instructions.

Price’s spokesman did not answer a question about prohibiting healthcare stocks, even though the subject was raised at the hearing.

"Why wouldn't you at least tell her, ‘Hey listen, stay clear of any companies that are directly affected by my legislative work?’ ” Sen. Chris Murphy (D-Conn.) asked at the hearing, referring to Price’s broker.

“Because the agreement that we have is that she provide a diversified portfolio,” Price replied.

But the full investment agreement appears to contradict a Trump transition statement on Tuesday that “pursuant to the arrangement with Morgan Stanley, the financial advisor, and not Dr. Price, has the discretion to decide which securities to buy and sell in his account.”

Price’s lawyers escalated the pushback with a threatening letter to CNN over its story linking the investment to the bill, and the Trump transition has demanded a retraction.

“Any statement or suggestion that Dr. Price directed purchases of Zimmer Biomet stock and introduced legislation in Congress to benefit such holdings is fundamentally disingenuous and devoid of fact,” the attorneys, Randy Evans and Benjamin Keane, said in their letter to CNN. “Dr. Price’s stake in Zimmer Biomet is held within a diversified, broker-directed account managed by Morgan Stanley that contains dozens of stocks in a variety of industry sectors beyond healthcare. Dr. Price’s financial advisor with Morgan Stanley was and is responsible for the design of his securities portfolio, has the discretion to decide which securities to buy and sell in his account, and directed all trades in the account.”

At the hearing, Price acknowledged deciding whether to buy a different stock. That stock is held in a second Morgan Stanley brokerage account, according to Price’s financial disclosure filed with the Office of Government Ethics.

“You made that decision to purchase that stock, not a broker, yes or no?” Sen. Patty Murray (D-Wash.) asked Price at the hearing.

“That was a decision I made, yes,” Price answered.

This other stock was an Australian biotech company called Innate Immunotherapeutics. Price said he learned about the company from Rep. Chris Collins (R-New York) and decided to invest after further research.

Price’s conversation with Collins has Democrats demanding to investigate whether the congressmen could have violated insider trading laws, especially since Price bought the stock through a private placement at a discount to the publicly available price. And Collins was recently overheard by reporters in the Capitol boasting about how many people he had made millionaires with stock tips.

“Congressman Price’s admission that Congressman Collins was involved in Price’s suspect stock dealings raises serious questions about whether or not they both engaged in insider trading,” Tyler Law, a spokesman for the Democratic Congressional Campaign Committee, said in the statement. “This is extremely troubling and the American people need immediate assurances that no House ethics rules or federal laws were broken.”

Price said he had no access to nonpublic information and didn’t even know about the discount. But the company publicly announced the discount in June.

“It really begs credulity, sir, when you say you did not know you got a discount on this,” Franken said at the hearing.

A Collins spokesman said the congressman has been involved with the company for 15 years and has discussed it with hundreds of people.

“Congressman Collins has never disclosed any nonpublic or improper information related to Innate Immunotherapeutics and has followed all ethical and legal standards required by the House of Representatives during his time in office,” the spokesman, Michael McAdams, said in a statement.

Collins would be covered by insider trading laws as a company official. Democrats are also wondering whether Price could be covered by a law against government officials trading on information they obtain from their official duties, known as the STOCK Act. Rep. Louise Slaughter (D-N.Y.), one of the authors of the law, has asked the Securities and Exchange Commission to investigate Price and Collins.

“This is exactly why I wrote the STOCK Act,” she said in a statement to POLITICO. “Congressman Price has now admitted he invested in the company after getting information from Congressman Collins, who wrote the amendment to the CURES Act that made this investment so valuable. We need to get to the bottom of the transaction and now we need to understand why the transition team lied to the public regarding the trades. It has all the appearances of a violation of the law.”

The watchdog group Public Citizen also asked the Securities and Exchange Commission and the Office of Congressional Ethics to investigate.

Price also responded to questions about his investments by citing his agreement with the Office of Government Ethics to divest from healthcare stocks within 90 days of his confirmation.

"We have agreed to every single recommendation that they've made to divest of whatever holdings we have that might even give the appearance of a possible conflict," Price said.

But OGE piped up on Twitter to clarify that its role is to prepare nominees for their appointments, not to sign off on past conduct.

“OGE’s focus is prevention,” the agency, which has previously tweeted topical responses to news events like Trump’s plan to step away from his businesses and apparent endorsement of retailer, tweeted. “OGE does not handle complaints of misconduct.