SEC probes possible insider stock trades by Sen. Richard Burr, relative

Senator Richard Burr, a Republican from North Carolina and senior member of the Senate Health, Education, Labor, and Pensions Committee, speaks during a confirmatory hearing in Washington, DC on Thursday, April 29, 2021.

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North Carolina Senator Richard Burr and his brother-in-law, who chairs an independent federal agency, were on the phone just before both men were selling shares weeks before the 2020 national Covid bans, the Securities and Exchange Commission said in a court filing.

The filing comes while the SEC continues to investigate whether Burr, a Republican, and his brother-in-law Gerald Fauth sold the shares based on intangible information Burr obtained in the course of his work.

Members of Congress are prohibited from dealing in non-public information obtained through their position as lawmakers.

Fauth is chairman of the National Mediation Board, an agency that promotes worker-executive relationships in the U.S. rail and aviation industries. He is also “the brother of Senator Burr’s wife, Brooke Burr,” according to the SEC note.

The SEC’s investigation focuses on the timing of the February 2020 trades after Burr and other lawmakers were informed of the threat of the coronavirus pandemic spreading to the United States.

A week after Burr and his brother-in-law sold their shares, stock markets began to plummet in fear that the pandemic would cripple the global economy. The Dow Jones Industrial Average lost 30% of its value in the weeks following the Burrs trades.

Burr said in March 2020, “I relied solely on public news in my decision to sell any shares.” He added, “In particular, I was closely following CNBC’s daily health and science coverage from its Asia offices at the time.”

The FBI seized Burr’s phone in May 2020 as part of a criminal investigation into the business. That move resulted in Burr stepping down as chairman of the Senate Intelligence Committee. On January 19, the day before Joe Biden was inaugurated as President, Burr announced that the Justice Department had informed him that it had closed its investigation without bringing charges against him.

The SEC, whose investigation is civil in nature, said in a new filing that Burr called his broker at 8:45 a.m. on Feb.13, 2020 to sell more than $ 1.65 million worth of shares, “all of them except for one of the stocks “. on the joint individual pension account of him and his wife …

At 11:32 a.m. that day, Burr called his fauth’s cell phone, according to the file in the U.S. District Court in Manhattan. “The call lasted 50 seconds.”

Gerald Fauth

Source: Wikipedia

At 11:33 a.m. a minute or less later, Fauth, chairman of the National Mediation Board, called his primary stockbroker’s landline, the SEC said.

After failing to reach his first broker, Fauth called a second broker within two minutes and “instructed her to sell several stocks in his wife’s account,” the file says.

Fauth “sold shares valued at $ 97,000 to $ 280,000 in six companies – including several that were hit particularly hard by the market impotence and economic downturn,” said ProPublica, who first reported on the filing.

Minutes later, following Burr’s own instructions earlier that morning, “the Senator’s broker entered deals for the sale of stocks in Senator Burr and his wife’s IRA accounts,” according to the file.

In the SEC filing, a court order is requested that would force Fauth to comply with a subpoena issued in March 2020. The subpoena requires documents, other evidence, and Fauth’s testimony.

Fauth and his lawyers blocked the subpoena, the file says.

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The SEC said in its filing: “Among other things, the commission is investigating whether Senator Richard Burr … Act, a law passed by the US Congress in 2012 that prohibits its members from using non-public information from their positions for personal gain.”

“The Commission is also investigating whether [Fauth] and his wife, Mary Fauth, sold securities on the same day based on material non-public information provided to them by Senator Burr in breach of his duties. “

A Burr spokesman and Fauth attorney did not immediately respond to requests for comment.