Senator Who Sold Off Stocks Before Coronavirus Market Crash Gets Hit with Lawsuit
Sen. Richard Burr has been sued by an investor in Wyndham Hotel stock for allegedly using Senate Intelligence Committee information to sell off his shares of the stock before their value plummeted during the coronavirus pandemic.
“Senator Burr owed a duty to Congress, the United States government, and citizens of the United States, including Plaintiff, not to use material nonpublic information that he learned by virtue of his duties as a United States Senator in connection with the sale or purchase of any security,” the lawsuit says, according to ABC News.
“Senator Burr breached that duty by selling stock, including Wyndham stock, based on that material nonpublic information.”
According to Senate disclosure forms, the North Carolina Republican, who chairs the Senate Intelligence Committee, made 33 stock transactions on Feb. 13.
The forms do not disclose the exact value of transactions but provide a range. The sales collectively netted Burr between $628,000 and $1.72 million.
Two weeks later, Burr was recorded making ominous predictions about the impact of the coronavirus, according to NPR.
“There’s one thing that I can tell you about this: It is much more aggressive in its transmission than anything that we have seen in recent history,” the senator told a small group of constituents at a private luncheon. “It is probably more akin to the 1918 pandemic.”
Burr also told the group he met with that the use of the military would be possible and that limits on travel were likely. Neither of those possibilities were were being publicly talked about at the time.
The senator released a statement following public scrutiny of his financial disclosures and even volunteered to submit himself to a Senate Ethics Committee investigation.
“I relied solely on public news reports to guide my decision regarding the sale of stocks on February 13,” his statement said. “Specifically, I closely followed CNBC’s daily health and science reporting out of its Asia bureaus at the time.
“Understanding the assumption many could make in hindsight however, I spoke this morning with the chairman of the Senate Ethics Committee and asked him to open a complete review of the matter with full transparency.”
Former federal prosecutor Thomas P. O’Brien filed the lawsuit on behalf of an investor named Alan D. Jacobson. O’Brien told ABC News that the civic case could provide a remedy for investors who believe the senator had an unfair advantage when he sold the stock.
“The senator made an unusual trade,” O’Brien said. “Our client was one of many people who traded without benefit of information that the senator had.”
The lawsuit says that Burr also violated the STOCK Act, a 2012 law that prevents senators from using inside information to guide their investments. Burr voted against the legislation, according to ABC News.
Despite Burr’s denial of the allegations against him, some ethical experts maintain authorities should look into the classified briefings Burr had access to during that time.
Republican ethics lawyer Matthew Sanderson said Burr’s claim that he sold off his stocks because of media reports on the coronavirus outbreak does not explain why other investors did not also act on the reporting at the time.
“To me that doesn’t hold any water,” Sanderson said.
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