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At least one senator is learning, it's not okay to profit off private information regarding a tragedy, as even some in his own party is turning against him. Sen. Richard Burr (R-NC), the chairman of the Senate Intelligence Committee, is being investigated by the Justice Department, accused of profiting from a sale of stocks after learning privileged information about the coronavirus pandemic, according to a person familiar with the matter.
The Securities and Exchange Commission is working on the investigation as well. As the head of the Senate Intelligence Committee, Burr participated in briefings and reports about coronavirus COVID-19. Along with that committee, he also sits on the Senate Health, Education, Labor, and Pensions Committee, which also received briefings.
Sometime around the middle of February, Burr sold off 33 stocks he and his spouse held. These were estimated to be worth between $628,033 and $1.7 million, according to Senate financial disclosures. This was the largest number of stocks he had traded in one day since 2016.
Alice Fisher, the chairman's attorney, said in a statement that the law allows any American, including a senator, to "participate in the stock market based on public information, as Senator Burr did.
"When this issue arose," continued the statement, "Senator Burr immediately asked the Senate Ethics Committee to conduct a complete review, and he will cooperate with that review as well as any other appropriate inquiry. Senator Burr welcomes a thorough review of the facts in this matter, which will establish that his actions were appropriate."
The Stock Act prohibits members of Congress, their staff, and other federal officials from trading based on insider information that was gathered during their work for the government. The law was passed in 2012, with Burr being one of the only three votes against it at the time. Some legal experts consider it difficult to cite it when filing criminal charges.
The person familiar with the matter said the investigation is just beginning. It's not clear how many of the stock trades are being questioned or how many total lawmakers will be involved, as there are three other senators who also sold off stocks at that time. Sen. Kelly Loeffler (R-GA) and her husband, Jeffrey Sprecher, who happens to be the chairman of the New York Stock Exchange, sold off stocks as well, as did Sen. Dianne Feinstein (D-CA) and Sen. James Inhofe (R-OK).
A prior investigation shows it may be difficult to charge the case under the Stock Act, just as the experts had said. The DOG and SEC investigated a House Ways & Means Committee staff member's communications with a law firm shortly before federal health officials announced a decision that affected reimbursement rates for medical care. In question was whether the staffer had tipped off a lobbyist who informed his clients, allowing them to trade on the decision that affected the value of health-care stocks.
The SEC subpoenaed congressional records, and a federal judge ruled in 2015 that Congress had to comply with some of the subpoena but didn't have to turn over records that related to "legislative activity." The judge decided those records didn't have to be turned over because of the Constitution's "speech and debate" clause. No charges were ever filed against the former staffer.
Melanie Sloan, a senior adviser to American Oversight, a watchdog group, said that due to that same clause that held up that prior case, Burr "cannot be questioned about what he learned regarding the coming pandemic in his role as chair of the Intelligence Committee, making prosecution improbable. However, she noted the SEC has jurisdiction in the issue, and if it finds Burr traded based on inside information, it could recommend he be expelled.
Records show that the stocks that were sold off include shares in industries that were hit hard by the COVID-19 pandemic. This includes the hotel, restaurant, shipping, drug manufacturing, and health care industries.
Burr has said he relied on "CNBC's daily health and science reporting out of its Asia bureaus" in deciding to trade.
One of Donald Trump's allies, Rep. Matt Gaetz (R-FL), tweeted on Monday that the Republican Party should remove Burr from his position as chairman during the investigation and asked how Senate Majority Leader Mitch McConnell (R-KY) can justify leaving Burr in charge of Senate Intelligence.
"Republicans need to do a better job cleaning our own house," he wrote.
Loeffler and her husband, Jeffrey Sprecher, have been scrutinized as well. In the weeks after a closed Senate briefing, she sold holdings that are valued between $1.25 million and $3.1 million in companies that include ExxonMobil and AutoZone. Both companies had significant drops in their stock prices. She purchased shares in a company that sells teleworking software as well, with much of the country now relying on working remotely.
She said the selling and buying she and her husband conducted were "at the decision of our investment managers" and that she learned of the changes only after they had taken place. "Certainly, I had no involvement," she said earlier this month.
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