Sen. Richard Burr is accused in a new federal lawsuit of selling his stock holdings after receiving intelligence briefings in late January about the impact of the emerging coronavirus outbreak, according to a report by ABC News.
An investor in the Wyndham Hotel chain accuses the North Carolina Republican of quickly selling off shares before they plunged nearly two-thirds in value after the virus was declared a global pandemic March 11.
The lawsuit states the intelligence briefings Burr received as chairman of the Senate Intelligence Committee would have provided he and others on the panel an unfair market advantage.
Three other senators are also ensnared in the matter, including Republican Sens. Kelly Loeffler of Georgia, James Inhofe of Oklahoma, and Democratic Sen. Dianne Feinstein of California, who all shed stocks in industries most stricken by the outbreak. All have denied any wrongdoing.
Burr is the first and only senator thus far to face a federal lawsuit over the stock sales.
“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. “Senator Burr breached that duty by selling stock, including Wyndham stock, based on that material nonpublic information.”
The network reported Burr sold $1.7 million in stock for he and his wife, including as much as $150,000 of Wyndham stock, on Feb. 13 before the markets began to nosedive.
The first news account of the selloff last week caused a firestorm in Washington.
On Friday, he defended the stock sale and invited a Senate Ethics Committee investigation to look into his actions.
“I relied solely on public news reports to guide my decision regarding the sale of stocks on Feb. 13,” Burr said, according to ABC. “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.”
ABC said Burr’s office did not respond to questions about the lawsuit.
The lawsuit was filed by Thomas P. O’Brien, a former federal prosecutor on behalf of an investor named Alan D. Jacobson, the network reported.
“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 STOCK Act, passed in 2012, makes it illegal for lawmakers to use their access to guide investment decisions.
The U.S. Securities and Exchange Commission typically investigates cases involving insider trading. The crime is subject to a maximum of $5 million in fines (up to $25 million for a business entity), and up to 20 years imprisonment, or both.
Burr and Loeffler have also issued public statements on social media, declaring they have done nothing wrong.
Loeffler had been on the job less than three weeks when she attended a private, senators-only briefing on the spread of COVID-19.
In the days and weeks after, financial disclosures show that either she or her spouse sold up to $3.1 million in stocks.
Scrutiny of her financial deals have led Democrats and Republicans to ask for her to resign or be investigated. One watchdog group has already filed an ethics complaint.
Loeffler is married to Jeffrey Sprecher, the chairman of the New York Stock Exchange.
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