The US Department of Health and Human Services building in Washington.
New York CNN Business  — 

Dozens of federal officials made lucrative stock and mutual fund trades in early 2020 as the government was preparing for the onslaught of Covid-19, according to a Wall Street Journal investigation.

In January of that year, while the public was broadly unaware of the scale and severity of the threat posed by the virus, US government agencies were mobilizing for a public health nightmare. Many of the officials behind those efforts also made well-timed trades in industries that stood to gain or lose mightily from the pandemic, according to the report.

“Nearly 400 officials across 50 agencies reported owning stocks in airline, resort, hotel, restaurant and cruise companies in early 2020,” the Journal wrote. It also cited roughly 240 officials who owned between $9 million and $28 million in stocks of drug, manufacturing and biotech firms that eventually won federal contracts related to Covid-19.

The WSJ report was based on financial disclosure forms for roughly 12,000 government officials between 2016 and 2021. CNN has not independently verified the reporting.

Trading spikes as government girds for crisis

In that crucial month of pandemic preparations, officials at the Department of Health and Human Services made far more stock sales than they had in previous months, the Journal reported. Their trading activity was 60% higher in January 2020 compared to the monthly average in 2019.

Federal officials are barred from working on matters in which they have a personal financial stake, and they’re not allowed to trade on nonpublic information acquired at work. They must disclose their financial assets and transactions every year.

The Journal said most agencies’ ethics rules focus on the kinds of stocks officials can trade, rather than when they can trade.

In one instance highlighted by the Journal, a high-ranking official at the National Institutes of Health reported selling $15,001 to $50,000 of a stock mutual fund on January 24 — the same day he sent an email describing the state of his department as “new coronavirus all the time.”

That official, Hugh Auchincloss, the principal deputy director at the NIH’s National Institute of Allergy and Infectious Diseases and one of Anthony Fauci’s top deputies, didn’t stop there. A few days later, as alarm about the virus appeared to be growing within the federal government, Auchincloss made six sales of mutual funds totaling between $111,006 and $315,000 in value.

All of those holdings would soon fall sharply in the market downturn that took root as Wall Street and the public began to worry about the virus’ spread.

Auchincloss didn’t respond to requests for comment by the Journal, and his office didn’t immediately respond to a request for comment from CNN.

The National Institute of Allergy and Infectious Diseases told the WSJ that financial disclosures are routinely reviewed by NIH ethics officials to ensure compliance with reporting requirements and resolve potential conflicts of interest. It declined to say whether Auchincloss made the trades himself or had a managed account, according to the Journal.

In another instance of potential conflicts flagged by the Journal, former Transportation Secretary Elaine Chao reportedly purchased more than $600,000 in two stock funds in March of 2020. At the time, her agency was involved in the pandemic response and her husband, Sen. Mitch McConnell, “was leading negotiations over a giant, market-boosting stimulus bill,” the Journal wrote.

A spokesperson for the Transportation Department didn’t immediately have a comment.

CNN previously reported that Sen. Richard Burr avoided about $87,000 of losses when he sold off stock at the beginning of the Covid-19 pandemic, according to a search warrant affidavit unsealed in September.

Investigators said in the warrant that because of his position in Congress, the North Carolina Republican knew about the threat of Covid-19 in February – before public concern of severe economic impacts from the pandemic crescendoed. The Justice Department launched an insider trading investigation into Burr, which eventually concluded without criminal charges.

— CNN’s Katherine Dillinger, Hannah Rabinowitz and Holmes Lybrand contributed to this article.