Newly unsealed documents that were part of an inquiry into Sen. Richard Burr show that the North Carolina Republican had profited greatly from a flurry of stock trades he made in February 2020 after receiving privileged information about the coming COVID-19 pandemic.
In 2020, the FBI launched an insider trading investigation into Burr for what the agency called “well-timed stock sales.” According to a search warrant from that investigation obtained this week by the Los Angeles Times in a Freedom of Information Act (FOIA) request, Burr had unloaded the vast majority of his and his wife’s holdings after the Senate Intelligence Committee, which he was a part of, was briefed about the pandemic and before the public was made aware of the pandemic’s coming effects.
By making these transactions, Burr profited by more than $164,000 while avoiding $87,000 of losses, according to an FBI affidavit uncovered by the FOIA request.
“His portfolio went from approximately 83% in equities to approximately 3% in equities. Beginning on February 20, 2020 — six days after Senator Burr’s sale of the majority of his equity — the stock market endured a dramatic and substantial downturn,” the affidavit reads. The document was used to request a warrant to search Burr’s cell phone, which a court granted.
The senator had sold 95 percent of his holdings in his Individual Retirement Account (IRA) and 58 percent of holdings in his wife’s IRA. Using three-quarters of holdings in a joint account between him and his wife, he also purchased $1.2 million in Treasury securities on February 12. The FBI investigator noted that investors often purchase Treasury funds before a market downturn.
The affidavit also notes that Burr’s brother in law, Gerald Fauth, dumped roughly $160,000 in stocks after talking with Burr in texts and a call. Previous reporting found that Burr had called Fauth a week before the market crashed due to the virus — and, a minute after hanging up, Fauth called his broker.
The document suggests that the Justice Department did have reason to believe that Burr was involved in insider trading and securities fraud, though the department later dropped its inquiry into the senator. Several other senators also came under scrutiny for their trades around the same time, but their investigations were dropped separately from the inquiry into Burr.
As of October of 2021, the Securities and Exchange Commission (SEC) was still investigating Burr and his brother for insider trading, according to ProPublica. It’s unclear if that inquiry is still ongoing or what it has found.
Even if Burr is never charged in relation to his trades, their questionable timing and expedient nature could bolster arguments for banning members of Congress and other high-level government officials from being able to trade individual stocks.
Lawmakers like Sen. Elizabeth Warren (D-Massachusetts) have been advocating for a stock ban for over a year, saying that allowing members of Congress to trade stocks is a conflict of interest and erodes public confidence in the institution. Though there are disclosure laws requiring members to make their stock holdings public, members of Congress and their staffers regularly break the law with little consequences.
Proposals for a stock ban have bipartisan support in Congress and are supported by a majority of the public. Still, none of the handful of stock ban bills that lawmakers have introduced over the past year have come to a vote.
Some lawmakers have suggested that the reason for the delay is House Speaker Nancy Pelosi (D-California), who has jurisdiction over which laws get a vote; Pelosi’s husband is a prolific stock trader who regularly trades hundreds of thousands or even millions of dollars’ worth of stocks in companies that could fall under congressional oversight.