Republican Sen. Richard Burr is defending his decision to sell up to $1.72 million in stock ahead of the impact of coronavirus on global markets and has called on the Senate Ethics Committee to investigate whether he breached any laws or congressional rules.
“I relied solely on public news reports to guide my decision regarding the sale of stocks on Feb. 13,” Burr, of North Carolina, said of the controversial trades. “Understanding the assumption many could make in hindsight, however, I spoke this morning with the chairman of the Senate Ethics Committee, and asked him to open a complete review of the matter with full transparency.”
Burr, who chairs the Senate Intelligence Committee, issued his statement as he and several other senators are facing intense scrutiny over the fortuitous timing of stock trades they made — as members of Congress were being briefed on the potential severity of the coming crisis, but before many in the general public were fully aware of the havoc the virus could wreak on the U.S. economy. Reports of these trades have brought criticism from all quarters.
Sources within the president’s inner circle said they were frustrated by trading activity, saying if Burr used information obtained in closed-door briefings he should resign. But during his public remarks Friday, President Trump dismissed the accusations, saying he found all the senators identified as “very honorable.”
Trump noted that one of those making trades was a Democrat, Sen. Dianne Feinstein, of California. Between late January and mid-February, she sold off up to $6 million worth stock — but the trades did not appear to be connected with companies impacted by the pandemic. She said she had “no input” on her husband’s financial transactions.
Oklahoma Republican Sen. Jim Inhofe reported the sale of up to half-a-million-dollars worth of stock in major industries between late January and mid-February, but said Friday he had not attended the Jan. 24 briefing on the virus, which was the first closed-door, all-Senate briefing on the matter, and had not communicated with his broker about the trades. Feinstein was also not at that first briefing.
Trades by Burr and Sen. Kelly Loeffler (R-Ga.) raised heightened attention, experts said, because there appeared to be direct ties between the trades and the coming medical crisis. Among the shares Burr sold were holdings in the hospitality industry, including up to $350,000 worth of stock in Extended Stay America, Wydham, and Park Hotels & Resorts Inc.– a spin-off of Hilton. While Loeffler sold large quantities of stock, one of only two purchases the Georgia senator made was a $250,000 investment in Citrix Systems, which creates remote work software.
Loeffler, a Republican from Georgia, went on Fox News on Friday to defend her high volume of trades that began the day in late January when the Senate health committee she is on was briefed on the evolving threat of coronavirus.
“I do want to set the record straight. I have seen some of those stories and it’s absolutely false and it could not be true,” she said. “If you actually look at the personal transaction reports that were filed it notices at the bottom that I am only informed of my transactions after they occur — several weeks.”
Burr’s Feb. 13 trades have brought the most scrutiny because they came seemingly out of the blue — he had not reported trades for more than a year — and they involved sales of his holdings in the hospitality industry. Filings he made with the Senate show he sold a hefty portion of his portfolio just a week after he wrote an op-ed on the Fox News website saying “the United States today is better prepared than ever before to face emerging public health threats, like the coronavirus.”
Even some Republicans Friday were urging the Securities and Exchange Commission to launch an investigation into Burr’s trades to determine if they violated the STOCK Act, a law that prohibits members of Congress or their staffers from profiting from their access to secret or non-public information. The law — which Burr voted against when it passed in 2012 on a 98-2 vote — carries both civil and criminal penalties.
A spokesperson for the SEC declined to say whether the agency would look into the trades.
Matthew Sanderson, a Republican, is an ethics lawyer with the Washington, D.C., firm Caplin & Drysdale. He told ABC News he views Burr’s statement as a “last gasp type of defense.” He said several aspects of Burr’s stock sale raise red flags. First, Burr acknowledges that he directed the trades himself. Burr says he decided to sell his stocks based on CNBC’s health and science reporting out of Asia. At the time, CNBC was carrying reports on the potential for coronavirus to reach the U.S., and on the signs that travel demand would slump across the Asia-Pacific region.
“You have the Senate Intelligence Committee chairman saying, as a last resort defense, that he wasn’t relying on his classified briefings, but was instead simply referencing CNBC reports that were available to the entire market,” Sanderson said. “To me that doesn’t hold any water.””
If the CNBC reports drove his decision, Sanderson said, you would expect to see others making similar sales. Markets are designed to respond to publicly available knowledge, he said, and yet Burr’s sales came weeks ahead of those by the broader public.
“These are exactly the type of facts that gave rise to the STOCK Act,” Sanderson said. “That’s why I think it should be investigated. You shouldn’t be telling the public one thing, and your broker another.”
In addition to the SEC, the Senate Ethics Committee has purview over the conduct of sitting members. Burr’s Republican colleague from North Carolina, Sen. Thom Tillis, said on Twitter Friday that he believes the ethics committee should get involved.
“Given the circumstances, Senator Burr owes North Carolinians an explanation,” Tillis wrote. “His self-referral to the Ethics Committee for their review is appropriate, there needs to be a professional and bipartisan inquiry into this matter, which the Ethics Committee can provide.”