Senator Richard Burr, Republican of North Carolina and a leading member of the Senate Committee on Health, Education, Labor and Pensions, speaks during a confirmation hearing in Washington, DC on Thursday April 29, 2021.
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North Carolina Senator Richard Burr and his brother-in-law, who is chairman of an independent federal agency, spoke on the phone shortly before the two sold their shares weeks before the nationwide Covid shutdowns in 2020, the Securities and Exchange Commission said in a civil court file.
The filing comes as the SEC continues to investigate whether Burr, a Republican, and his brother-in-law Gerald Fauth sold the shares based on material non-public information Burr obtained in the course of his work.
Members of Congress are prohibited from discussing non-public information they receive as a result of their duties as legislators.
As chairman of the Senate Intelligence Committee, Burr had access in January and February 2020 to classified intelligence reports containing stern warnings about the coronavirus pandemic.
The SEC investigation focuses on the timing of transactions in February 2020, after Burr and other lawmakers were made aware of the danger of the pandemic spreading in the United States.
Fauth is chairman of the National Mediation Board, an agency that facilitates labor-management relations in the US rail and airline industries. He is also “the brother of Senator Burr’s wife, Brooke Burr,” the SEC filing notes.
A week after Burr and his brother-in-law’s February stock sales, stock markets began to plunge over fears the pandemic could cripple the global economy. The Dow Jones Industrial Average lost 30% of its value in the weeks following the Burr trades.
Burr said in March 2020: “I have relied solely on public information to guide my decision to sell shares.” He added, “Specifically, I followed CNBC’s daily health and science reports closely from its offices in Asia at the time.”
The FBI seized Burr’s phone in May 2020 as part of a criminal investigation into the trades. This decision led Burr to step down as chairman of the intelligence committee. On January 19, the day before Joe Biden was inaugurated as president, Burr announced that the Department of Justice informed him that it had closed its investigation without filing a complaint against him.
The SEC, in a new filing in its civil case, said that Burr, at 8:45 a.m. on February 13, 2020, called his stockbroker to sell more than $ 1.65 million in stock, “all but one of his shares and his wife’s joint individual retirement account … portfolio. “
At 11:32 a.m. that day, Burr called Fauth’s cell phone, according to the case filed with the U.S. District Court in Manhattan. “The call lasted 50 seconds.”
At 11:33 a.m., a minute or less later, Fauth called his stock broker’s landline, the SEC said.
After failing to reach his first broker, Fauth called a second broker within two minutes and “ordered him to sell several shares on his wife’s account,” the file reveals.
Fauth “sold between $ 97,000 and $ 280,000 of shares in six companies – including several that were particularly affected by the collapse of the market and the economic downturn,” according to ProPublica, which first reported the court case. .
Minutes later, on Burr’s own instructions earlier in the morning, the senator’s broker “entered into transactions to sell shares in the IRA accounts of Senator Burr and his wife,” according to the filing.
The SEC filing calls for a judge’s order that would compel Fauth to comply with an investigative subpoena that was issued in March 2020. The subpoena seeks documents, other evidence and Fauth’s testimony .
Fauth and his lawyers blocked this subpoena, the file says.
The SEC said in its file that “among other things, the Commission is investigating whether Senator Richard Burr … sold shares based on material non-public information on February 13, 2020, in violation of federal securities laws. securities, including the STOCK Act, a law passed by the US Congress in 2012 to prohibit its members from using non-public information derived from their positions for their personal benefit.
“The Commission is also examining whether [Fauth] and his wife, Mary Fauth, sold securities the same day based on material non-public information provided to them by Senator Burr in violation of his duties. “
A spokesperson for Burr and a lawyer for Fauth did not immediately respond to requests for comment.