SEC: Richard Burr, Brother-in-Law Used ‘Nonpublic Information’ to Trade Stocks Before Market Dropped

WASHINGTON, DC - SEPTEMBER 30: Sen. Richard Burr (R-NC) gives an opening statement during a Senate Health, Education, Labor, and Pensions Committee hearing to discuss reopening schools during Covid-19 at Capitol Hill on September 30, 2021 in Washington, DC. (Photo by Greg Nash- Pool/Getty Images)
Greg Nash- Pool/Getty Images

Sen. Richard Burr (R-NC) had “material nonpublic information” revolving around the coronavirus pandemic’s impact when he directed his stockbroker to dump over $1.6 million in stocks a week before the market drastically dropped in March of last year, in addition to telling his brother-in-law who then did the very same, according to federal court filings.

For the first time, the Securities and Exchange Commission (SEC) publicly made allegations regarding Burr using “material nonpublic information,” according to ProPublica. The SEC wrote in the court filing that “It appears from the commission’s investigation that Senator Burr possessed material nonpublic information concerning COVID-19 and its potential impact on the U.S. and global economies.”

The documents included information that Burr “may have used the information he learned” being a part of different Senate committees such as the Senate Select Committee on Intelligence and the Senate Health, Education, Labor and Pensions (HELP) Committee. He also has relationships with former staffers directly linked the preparedness and response of the government to the pandemic.

The order indicated that the SEC has an ongoing insider trading investigation into Burr in addition to his brother-in-law, Gerald Fauth, who called his broker one minute after the two got off the phone.

The documents indicated that Burr called his stockbroker in the morning, then shortly after called Fauth, his brother-in-law. One minute later, Fauth called his broker, instructing him to dump “several stocks” in his wife’s account:

  • 8:54 a.m. Burr, in a call that lasted 12 minutes and 52 seconds, instructed his broker to sell $1.6 million in stocks, “which was equivalent to “all by one of the equities” from his joint IRA account with his wife.
  • 11:32 a.m. Burr called Fauth, which lasted 50 seconds.
  • 11:33 a.m. Fauth called his “primary broker” and was told he was out of the office, which lasted one minute and six seconds.
  • 11:35 a.m. Fauth called his “another broker,” where he instructed the person to sell “several stocks in his wife’s account” in the call that was 24 minutes long.
  • 11:38 a.m. Burr’s brokers “entered the trades to sell equities in the IRA account” per the senator’s instructions.

ProPublica reported in May of last year that Fauth — who in 2017 was appointed by former President Donald Trump and reappointed by President Joe Biden to be a member of the National Mediation Board, a three-person board to an independent federal agency that facilitates labor-management relations for U.S. railroads and airlines industries — had dumped the stocks the same way Burr did but was unaware of the two speaking before the trades were made to dump the stocks.

ProPublica noted that the news of the phone calls came after “an effort by the SEC to force Fauth to comply with a subpoena that the agency said he has stonewalled for more than a year.” Fauth reportedly said he could not comply with the subpoena due to a medical condition enough though he still was “healthy enough to continue his duties at the National Mediation Board.”

The report added:

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

Burr came under scrutiny after ProPublica reported that he sold off a significant percentage of his stocks shortly before the market tanked, unloading between $628,000 and $1.72 million of his holdings on Feb. 13 in 33 separate transactions. The precise amount of his stock sales, more than $1.6 million, is also a new detail from this week’s SEC filings. In his roles on the intelligence and health committees, Burr had access to the government’s most highly classified information about threats to America’s security and public health concerns.

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

However, despite Burr selling the stocks, he wrote in an op-ed that “the United States today is better prepared than ever before to face emerging public health threats, like the coronavirus.” The senator has defended his actions, affirming that he used only “public information” despite a week after the dumping of stocks, the stock market began crashing.

Jacob Bliss is a reporter for Breitbart News. You can follow him on Twitter.

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