SEC Investigates Sen. Richard Burr For Possible Insider Trading In Pandemic Stock Sales


WASHINGTON – North Carolina Senator Richard Burr and his brother-in-law are under investigation by the Securities and Exchange Commission for potential insider trading, a case that stems from their brutal sales of financial holdings over the years. early days of the coronavirus pandemic, according to recent Federal Court filings.

Burr, a Republican, is among several lawmakers on both sides who were outraged by their aggressive trade in early 2020, before the economic threat from the virus became widely known. This has fueled accusations that members of Congress acted on the basis of inside information obtained in the course of their official duties for financial gain, which is illegal under a law known as STOCK. Act.

Burr has previously been the subject of an investigation by the Trump administration’s Justice Department for unloading $ 1.6 million from his wallet in January and February 2020. The department exonerated him for nearly a year. later – January 19, Donald Trump’s last full day in office.

But the SEC continued to investigate Burr, according to court documents filed in the Southern District of New York that first became public last week. The agency enforces federal securities law.

Lawyers for Burr as well as Gerald Fauth, who is Burr’s wife’s brother, did not immediately respond to requests for comment. Burr has previously denied any wrongdoing.

Archives (October 2020): How the pandemic presented a stock market opportunity to Senator David Perdue of Georgia

The filed documents stem from a case brought by the SEC to force Fauth to comply with a subpoena. The agency argued that his close relationship with Burr and a phone call between the two, followed by calls to Fauth’s brokers, made his testimony “critical”.

“Whether Fauth himself had been made aware of Senator Burr’s inside information, and whether Fauth knew that Senator Burr was in breach of his obligations under the STOCK Act by providing that information, are matters on which Fauth is uniquely positioned to talk, “the SEC said in a filing.

To support their case, SEC attorneys released a timeline of phone calls from February 13, 2020, the day Burr sold the vast majority of his portfolio. It was about a week before the stock market crashed.

At the time, Burr had “important non-public information regarding COVID-19 and its potential impact on the US and global economies” which he “learned from his position” as chairman of the Senate committee intelligence and former staff leading the government’s response to the coronavirus. , alleges the SEC in the court file.

That day, after Burr asked his own broker to sell, he spoke with Fauth on a call that lasted 50 seconds.

Related (December 2020): How Georgian Senator David Perdue cashed in coronavirus stock trades

A minute later, according to the court document, Fauth called one of his brokers. Two minutes later, he called another broker and ordered him to sell shares on his wife’s account.

Later that day, Burr, who was staying at the Fauth’s home in suburban Washington, logged into his online brokerage account from an IP address registered in the name of Fauth’s wife, according to the reports. court records.

Burr may have garnered the most attention of any congressman for his trades at the start of the pandemic. He was captured in a recording privately warning a group of influential voters in early 2020 to prepare for economic devastation.

Burr denied exchanging private information, but resigned as chairman of the Senate Intelligence Committee, a role in which he signed a bipartisan report on Russian interference in the 2016 presidential election, after the FBI obtained a search warrant to seize a cell phone.

Archives (August 2020): Russia interfered on Trump’s behalf in 2016, finds bipartisan Senate intelligence report

Burr is not looking to be re-elected next year. He was elected to the Senate in 2004 after a 10-year term in the House.

From the archives (March 2014): Richard Burr and Kelly Loeffler, Republican Senators from North Carolina and Georgia, sold stocks before the stock market crash when they gained access to non-public information about the severity of the pandemic

The STOCK Act, the law under which Burr and Fauth are under investigation, was passed with bipartisan support in 2012 following a stock market scandal in Congress. It has been hailed by government ethics groups and watchdogs as a long overdue step.

But for almost ten years, no one has been convicted under the law. Meanwhile, congressional stock trading continued at a steady pace.

Legal experts say such insider trading cases are exceptionally difficult to prosecute because they require definitive proof of whether someone acted on the basis of non-public information. It depends on the demonstration of intention – a high burden.

That’s part of why SEC investigators are trying to get a court order to force Fauth to testify a year and a half after issuing an initial subpoena.

Fauth, a government official who chairs the National Mediation Council, has repeatedly cited his health as a reason for not complying. His lawyers said that was a valid reason.

But he continued to carry out his duties for the mediation board, participating in appeals and meetings. He was recently appointed for another three-year term and appeared last month with the agency’s attorney to be interviewed by Republican Senate staff ahead of his confirmation hearing for the post.

“When he appeared for this interview, Fauth did not seem to have followed [his] doctor’s advice to avoid “stressful situations,” ”the SEC wrote in the court file.

Read on: Watchdog Says “Substantial Reason To Believe” Congressman’s Wife Used Insider Information In Stock Trading

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