WASHINGTON: Senator Richard Burr of North Carolina and his brother-in-law are being investigated by the Securities and Exchange Commission for possible insider trading, a case that stemmed from a sudden sale of financial holdings during the early days of the coronavirus pandemic. Recently to file in federal court.
Burr, a Republican, is among several lawmakers on both sides who faced outrage over his aggressive trading in early 2020, before the economic threat from the virus was widely known. This fueled allegations that members of Congress were acting on internal information obtained through their official duties for financial gain, which is illegal under a law known as the Stocks Act.
Barr was investigated by the Trump administration’s Justice Department for withdrawing $1.6 million from his portfolio in January and February 2020. The department cleared him for wrongdoing nearly a year later, on January 19, Donald Trump’s last day in office.
But the SEC is continuing to investigate Burr, according to court documents filed in the Southern District of New York, which were first made public last week. The agency enforces federal securities law.
Burr’s lawyers as well as Gerald Foth, who is the brother of Burr’s wife, did not immediately respond to requests for comment. Burr has previously denied any wrongdoing.
The filing stems from a case brought by the SEC to compel Fauth to comply with a subpoena. The agency argued that her close relationship with Burr and a phone call between the two, followed by calls to Foth’s brokers, made her testimony valuable.
The SEC asked in a filing whether Foth was tipped with internal information from Senator Burr, and whether Foth was aware that Senator Burr was violating his duties under the Stock Act by providing the information. .
To strengthen their case, SEC lawyers issued a timeline of phone calls from February 13, 2020, the day Burr sold most of his portfolio. There was volatility in the stock market about a week ago.
Burr at the time had access to “nonpublic information related to Covid-19 and its potential impact on the US and global economies, some of which he said through his position as chairman of the Senate Intelligence Committee and the government’s coronavirus response.” ” Lessons learned from former employees who gave instructions, allegation to be filed in SEC court.
That day, when Burr instructed his broker to sell, he spoke to Fouth in a call lasting 50 seconds.
A minute later, the court document states, Fauth called one of his brokers. After two minutes he called another broker and instructed him to sell the shares in the wife’s account.
Later that day, Burr, who was living at the Foths’ home in suburban Washington, logged into his online brokerage account with the IP address registered for Foth’s wife, court records state.
Burr was perhaps the most scrutinized of all members of Congress for his trades in the early days of the pandemic. He was imprisoned in a recording privately warning a group of influential constituents to prepare for an economic catastrophe in early 2020.
Burr denied trading on personal information, but stepped down from his position as chairman of the Senate Intelligence Committee after the FBI obtained a search warrant to seize a cellphone.
Burr is not seeking re-election next year. He was elected to the Senate in 2004 after running for 10 years in the House.
The Stock Act, the statute under which Burr and Foth are being investigated, was passed in 2012 with bipartisan support after Congress’ stock-trading scandal. This was hailed by government ethics groups and watchdogs as a long-pending move.
But no one has been convicted under the law in nearly a decade. Meanwhile, Congress’s stock trading continues to rise.
Legal experts say such insider trading cases are extremely difficult to prosecute because they have to definitively prove whether someone has acted on non-public information. It hinges on demonstrating the intention of a higher burden.
That’s why SEC investigators are trying to get a court order to force Fouth to testify a year and a half after he was first issued the summons.
Fauth, a government official who serves as the chairman of the National Arbitration Board, has repeatedly cited his health as the reason for non-compliance. His lawyers have called it a valid reason.
But he continued to perform his duties for the Board of Arbitration, attending calls and meetings. He was recently nominated for another three-year term and appeared last month to be interviewed by Republican Senate staffers ahead of his confirmation hearing for the position with the agency’s attorney.
When he appeared for that interview, Foth did not follow (his) physician’s advice to avoid stressful situations,” the SEC filed in court.
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Associated Press writer Eric Tucker contributed to this report.
Disclaimer: This post has been self-published from the agency feed without modification and has not been reviewed by an editor
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