January 31, 2018

CDC director resigns amid reports that she bought tobacco stocks while in office

Daily Briefing

    CDC Director Brenda Fitzgerald on Wednesday resigned from her position amid reports that she traded stocks in a tobacco company while in office.

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    Documents show Fitzgerald purchased, sold tobacco company stocks

    Fitzgerald assumed the role of CDC director in July 2017. Documents obtained by Politico under the Stock Act show that during July, August, and September 2017, Fitzgerald purchased tens of thousands of dollars in new stock holdings from at least 12 companies over three months. The purchases included between $1,001 and $15,000 in shares from Japan Tobacco, one of the world's largest tobacco companies, which, through a subsidiary, sells tobacco products in the United States.

    In addition, Fitzgerald purchased between $15,001 and $50,000 in shares from US Food Holding and between $1,001 and $15,000 in shares from three health care companies:

    • Bayer, which has worked with CDC on efforts related to the Zika virus;
    • Humana; and
    • Merck, which is working to develop an Ebola vaccine.

    According to Politico, some of the purchases took place before Fitzgerald entered into a formal ethics agreement with HHS on Sept. 7, 2017, which clarified potential conflicts of interests. 

    Conflict of interest concerns

    According to Politico, the stock trading raised additional conflict-of-interest concerns about Fitzgerald, who already had faced questions about her financial ties to the health care industry. Fitzgerald during her time as CDC director had to recuse herself from efforts related to cancer detection and the opioid misuse epidemic because of her financial ties, as mandated under the ethics agreement, Politico reports.

    Politico reports that Fitzgerald toured CDC's Tobacco Laboratory on Aug. 9, 2017—a day after she bought shares in Japan Tobacco. In addition, Fitzgerald between Aug. 1, 2017, and Oct. 27, 2017, took part in meetings related to Ebola and the Zika virus, Politico reports.

    According to Politico, Fitzgerald's ethics agreement with HHS identified almost all of the companies she had invested in during the first three months of her time as CDC director as conflicts of interest. Documents show Fitzgerald on Oct. 29, 2017, sold her shares of Japan Tobacco, Politico reports. According to the documents, Fitzgerald by Nov. 21, 2017, had sold all of her stock holdings valued at greater than $1,000.

    An HHS spokesperson had confirmed Fitzgerald's "potentially conflicting" stock purchases and explained that Fitzgerald's financial manager had handled the purchases, which were then sold.

    The spokesperson said, "Like all presidential personnel … Fitzgerald's financial holdings were reviewed by the HHS Ethics Office, and she was instructed to divest of certain holdings that may pose a conflict of interest." The spokesperson continued, "During the divestiture process, her financial account manager purchased some potentially conflicting stock holdings," adding, "These additional purchases did not change the scope of … Fitzgerald's recusal obligations, and … Fitzgerald has since also divested of these newly acquired potentially conflicting publicly traded stock holdings."

    HHS had declined to respond to specific questions regarding Fitzgerald's investments, including whether Fitzgerald had approved the transactions and what activities or decisions she rescued herself from while she held the shares.

    Fitzgerald resigns

    HHS on Wednesday announced that Fitzgerald had resigned from her position as CDC director, citing her financial ties to the health care industry.

    HHS spokesperson Matt Lloyd in a statement said, "Fitzgerald owns certain complex financial interests that have imposed a broad recusal limiting her ability to complete all of her duties as CDC director." He continued, "Due to the nature of these financial interests, … Fitzgerald could not divest from them in a definitive time period" (Politico, 1/31; Hellmann, The Hill, 1/31; Branswell, STAT News, 1/31; Karlin-Smith/Ehley, Politico, 1/30; Baker, "Vitals," Axios, 1/31; Sullivan, The Hill, 1/30; Haberkorn/Ehley, Politico, 1/18). 

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