SEC eyes phone calls in Sen. Burr insider trading probe
The Securities and Exchange Commission is investigating whether Sen. Richard Burr (R-N.C.) and Gerald Fauth, his brother-in-law, violated federal securities laws by abruptly selling financial holdings early on in the COVID pandemic, court filings made public last week show.
Why it matters: The Department of Justice under the Trump administration opened and later closed an insider trading probe into Burr and several other lawmakers from both parties. But the new filings show that the SEC never dropped its investigation into the North Carolina lawmaker.
By the numbers: Burr, who chaired the Senate Intelligence Committee at the time, sold between $582,029 and $1.56 million worth of stock on Feb. 13, 2020, in companies that would be hit particularly hard by the coronavirus, according to transaction reports obtained by ProPublica.
- Around that time, he was receiving daily updates from the intelligence community about national security threats against the U.S., including the growing coronavirus outbreak.
- On Feb. 13, Fauth, who was appointed by former President Trump to the National Mediation Board in 2017, also dumped between $97,000 and $280,000 worth of shares in companies that would later be rattled by the virus.
- The stock market tanked in response to the pandemic about a week after Burr's and Fauth's sell-offs, the SEC said in the court filing.
The filings stem from a case in which the SEC is attempting to force Fauth to testify in its investigation into whether he and Burr used "material nonpublic information" to benefit financially.
- The agency is in part focused on multiple phone calls between Burr and Fauth in February 2020, including one particular call on Feb. 13 — the same day Burr and Fauth sold large quantities of stock.
- On that day, the SEC alleges that Fauth initiated stock sales in his wife's brokerage account immediately after speaking to Burr on the phone for 50 seconds.
- Directly before that phone call, Burr liquidated $1.6 million worth of stock in his and his wife's individual retirement account.
- The agency said in the filing that it first subpoenaed Fauth on May 26, 2020. Fauth's counsel has maintained that he is unable to give testimony because of undisclosed health concerns.
- The SEC argued that Fauth's health should not prevent him from complying with its subpoena because he has continued to serve on the National Mediation Board despite his health concerns.
The big picture: After the Justice Department opened its investigation into Burr, he stepped down as chair of the Senate Intelligence Committee.
- The senator was also sued by a shareholder of Wyndham Hotels and Resorts, who alleged that Burr violated federal securities law and abused his office when he sold up to $150,000 worth of shares in that company on Feb. 13.
What they're saying: Burr's office and lawyers for Fauth did not immediately respond to requests for comment.
- Burr has previously denied any wrongdoing.