Richard Burr sued for dumping stocks ahead of coronavirus panic
An investor is suing Sen. Richard Burr for securities fraud connected to stock sales he made after private coronavirus briefings, court papers show.
Wyndham Hotels shareholder Alan Jacobson filed the lawsuit Monday in Washington, DC, federal court, alleging that the North Carolina Republican “acted as a scofflaw in a time of national crisis” by exploiting inside information to dump up to $1.7 million in stocks before the pandemic caused global markets to collapse.
The complaint focuses on Burr and his wife’s sale of as much as $150,000 worth of stock in Wyndham, the international hotel chain that has taken a beating from the coronavirus pandemic.
The company’s stock price closed at $59.10 on Feb. 13, the day Burr dumped the shares as he reportedly received briefings on the coronavirus threat. Wyndham shares have since plunged more than 50 percent to finish at $28.83 on Tuesday as the virus depressed demand for travel.
“Senator Burr owed a duty to Congress, the United States government, and citizens of the United States, including Plaintiff, not to use material nonpublic information that he learned by virtue of his duties as a United States Senator in connection with the sale or purchase of any security,” Jacobson’s complaint reads. “Senator Burr breached that duty by selling stock, including Wyndham stock, based on that material nonpublic information.”
The lawsuit accuses Burr of violating the STOCK Act, a 2012 law that bans members of Congress from profiting from non-public information they learn on the job. Burr was one of just three senators to vote against the law.
Spokespeople for Burr did not immediately respond to a request for comment on the lawsuit. The senator has said his stock sales were guided only by public news reports about the virus crisis, but he nonetheless asked the Senate Ethics Committee to review them on Friday.
Three other senators — Kelly Loeffler (R-Ga.), Jim Inhofe (R-Okla.) and Dianne Feinstein (D-Calif.) — also dumped stocks after a closed-door Jan. 24 briefing on the coronavirus. All three have said they weren’t directly involved in the decisions, and Feinstein and Inhofe said they did not attend the briefing. But that hasn’t stopped some Democratic officials from calling for Burr and Loeffler to resign.
As the scandal gained steam, the Securities and Exchange Commission’s top enforcement watchdogs issued a blanket warning against insider trading amid the pandemic that has wreaked havoc on companies around the world.
“Given these unique circumstances, a greater number of people may have access to material nonpublic information than in less challenging times,” Stephanie Avakian and Steven Peikin, co-directors of the SEC’s enforcement division, said in a Monday statement. “Those with such access — including, for example, directors, officers, employees, and consultants and other outside professionals — should be mindful of their obligations to keep this information confidential and to comply with the prohibitions on illegal securities trading.”