Richard Burr’s brother-in-law called the stock broker a minute after hanging up on the phone with the Senator

This story was originally published by ProPublica, a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one delivered to your inbox.

After North Carolina Senator Richard Burr emptied more than $ 1.6 million in shares in February 2020 a week before the coronavirus market crash, he called his brother-in-law, according to a new file from the Securities and Exchange Commission.

They spoke for 50 seconds.

Burr, according to the SEC, had material non-public information regarding the inbound economic impact of the coronavirus.

The next minute, Burr’s brother-in-law, Gerald Fauth, called his broker.

ProPublica previously reported that Fauth, a member of the National Mediation Council, emptied stocks on the same day as Burr. But it was previously unknown that Burr and Fauth spoke to each other that day and that their contact took place just before Fauth himself began the process of dumping inventory.

The revelations are part of an SEC effort to force Fauth to comply with a subpoena the agency said it blocked for more than a year, and which was filed shortly thereafter. ProPublica story.

In the filings, the SEC also revealed that an insider trading investigation is underway into Burr and Fauth’s transactions.

It had previously been reported that federal prosecutors had decided not to indict Burr.

Burr’s spokesperson did not immediately respond to questions. Fauth’s lawyer and the SEC did not answer questions. Fauth hung up on a ProPublica journalist.

According to the SEC, Fauth cited a medical condition for which he cannot comply with the subpoena, even though he is in good enough health to continue his duties on the National Mediation Board. In its documents, the SEC accuses Fauth of having engaged in “a fierce battle” to dodge the subpoena.

In 2017, President Donald Trump appointed Fauth to the three-person board of directors, a federal agency that facilitates labor-management relations in the country’s rail and airline industries. President Joe Biden returned him to the board of directors.

On the day he got the call from Burr, Fauth sold between $ 97,000 and $ 280,000 of shares in six companies, including several that were particularly hard hit by the market crash and the economic downturn. According to the SEC, the first broker he called after hearing Burr was out of the office, so he immediately called another broker to execute the trades.

In its documents, the SEC also alleges, for the first time, that Burr had material non-public information on the economic impact of the upcoming coronavirus crisis, based on his role at the time as chairman. of the Intelligence Committee, as a member of the Ministry of Health. committee and through former staff who were leading key aspects of the government’s response to the virus.

The week following the transactions, the market began its crash, falling more than 30% the following month.

Burr came under scrutiny after ProPublica reported that he had sold a significant percentage of his shares shortly before the market collapsed, offloading between $ 628,000 and $ 1.72 million of his holdings on February 13 in 33 separate transactions. The precise amount of its share sales, over $ 1.6 million, is also a new detail in documents filed with the SEC this week. In his roles on intelligence and health committees, Burr had access to the most confidential government information on threats to US security and public health issues.

Prior to its sale, Burr had assured the public that the federal government was well prepared to deal with the virus. In a February 7 editorial he co-wrote with another senator, he said that “the United States is now better prepared than ever to deal with emerging public health threats, such as the coronavirus” .

That month, however, according to a recording obtained by NPR, Burr had given a VIP group at an exclusive social club a much more dire glimpse of the economic impact of the coronavirus, warning that it could cut business travel, cause schools to close and lead to the mobilization of the army to compensate for overwhelmed hospitals.

Burr defended his actions, saying he was relying solely on public information, including CNBC reports, to inform his trades and did not rely on the information he obtained as a senator.

Alice Fisher, Burr’s lawyer, said ProPublica at the time when “Sen. Burr participated in the stock market based on public information and he did not coordinate his decision to trade on February 13 with Mr Fauth.

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