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Burr Seeks Ethics Investigation After Uproar Over Stock Sales Stock Sales by Senator Richard Burr Ignite Political Uproar
(about 8 hours later)
WASHINGTON — Senator Richard M. Burr, Republican of North Carolina, said on Friday that he had asked the Senate Ethics Committee to scrutinize sales he made of hundreds of thousands of dollars’ worth of stock just before the coronavirus ravaged the stock market, in an attempt to clear himself of accusations that he traded on nonpublic information. By Eric Lipton, Nicholas Fandos, Sharon LaFraniere and Julian E. Barnes
Under mounting political pressure to explain the sales or resign, Mr. Burr did not deny in a new statement on Friday that he had made the mid-February sales out of fears about the impact of the coronavirus. WASHINGTON — The nation remained fixated on the final acts of the impeachment drama in early February, but as the Senate prepared to acquit President Trump, Senator Richard M. Burr, Republican of North Carolina and the chairman of the Intelligence Committee, already had his eye on a troubling new threat: the coronavirus.
But he said the decision “relied solely on public news reports” on CNBC out of Asia, where the virus was spreading rapidly at the time. The sales, he said, were not based on special information he was privy to as a senator or the chairman of the Senate Intelligence Committee. On the morning of Feb. 4, Mr. Burr assembled members of the committee in a secure room on Capitol Hill to hear for the first time from intelligence officials about how foreign powers were responding to what the World Health Organization had days earlier declared a global health emergency.
“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,” Mr. Burr said. Their warnings were not highly classified or all that specific, drawn largely from diplomatic wires and publicly reported information, according to three people familiar with them. But at a time when the White House was playing down threats from the virus, intelligence officials from the C.I.A. painted an early picture of the outbreak’s geopolitical implications.
The six-person Ethics Committee is led by Senator James Lankford, Republican of Oklahoma, and typically conducts its work in secrecy. So although Mr. Burr asked for a review with “full transparency” it is unlikely that the panel will make its proceedings public unless or until it issues a report. Around the same time, Mr. Burr, a longtime proponent of increased federal efforts to prepare for a global health pandemic, was receiving similar briefings from top government health officials through another Senate committee he sits on. Those sessions, including an update on Feb. 12, were focused on the readiness of the United States for a potential epidemic, but also touched on the possible economic fallout.
The matter may be difficult to untangle. As a member of both the Senate Health, Education and Labor Committee and the Intelligence Committee, Mr. Burr is frequently briefed by national security and health officials on threats to the United States, including potential pandemics like the novel coronavirus. In the case of the Intelligence Committee, much of that information may be classified. The next day, Feb. 13, Mr. Burr sold off 33 different stock holdings, worth a collective $628,000 to $1.7 million, liquidating a large share of his portfolio.
Legislation called the STOCK Act enacted in 2012 prohibits lawmakers and staff from using nonpublic information to buy or sell stocks, with both criminal and civil penalties for violations. But the law left questions about how “nonpublic” is defined. Mr. Burr’s sale of the shares in the weeks before the market plunged over concerns about the economic impact of the virus at a time when Mr. Trump and other Republican officials were playing down the threat is now coming under intense scrutiny. It has also raised questions about whether he avoided losses by trading on inside information as Americans are looking to Washington for help in a severe crisis.
“Members of Congress and an employee of Congress may not use nonpublic information derived from such person’s position as a Member of Congress or employee of Congress or gained from the performance of such person’s official responsibilities as a means for making a private profit,” the law says. At least four other senators, as well as about two dozen House lawmakers, also sold some of their financial holdings in the same period. Like Mr. Burr, the other senators said they did nothing wrong and were not acting on information unavailable to the general public.
Matthew T. Sanderson, a lawyer who advises members of Congress and candidates and who is a Republican, said the actions by Mr. Burr at a minimum need to be examined. The stock sale ignited a political firestorm from both the left and the right, as calls immediately emerged for the resignation of Mr. Burr, who overnight found himself battling to avoid becoming the symbol of a financially advantaged elite at a populist moment.
Under pressure to explain himself, Mr. Burr on Friday said that he had asked the Senate Ethics Committee to scrutinize the sales in an attempt to clear his name.
“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,” Mr. Burr said in statement.
The four other senators — Dianne Feinstein, Democrat of California, James M. Inhofe, Republican of Oklahoma, Kelly Loeffler, Republican of Georgia, and David Perdue, Republican of Georgia — have each rejected any suggestion that they played any role in the stock sales, saying their portfolios are managed by others and they were perhaps not even aware the securities were being sold.
But Mr. Burr has not disputed that he was involved in the decision, nor that it was motivated by a fear that markets in the United States were about to decline. He said on Friday that his decision had been based “solely on public news reports” out of Asia, largely from CNBC.
The matter may be difficult to untangle. As a member of both the Senate Health, Education Labor and Pensions Committee and the Intelligence Committee, Mr. Burr was frequently briefed by national security and health officials on threats to the United States, including potential pandemics like the coronavirus. In the case of the Intelligence Committee, much of that information was classified.
Legislation called the STOCK Act enacted in 2012 prohibits lawmakers and staff members from using nonpublic information to buy or sell stocks, with both criminal and civil penalties for violations. But the law left questions about how “nonpublic” is defined.
Matthew T. Sanderson, a lawyer who advises members of Congress and candidates and who is a Republican, said the actions by Mr. Burr at a minimum needed to be examined.
“I don’t know whether there is a violation, but it is certainly the type of facts that motivated the passage of the STOCK Act in the first place, and they are certainly the type of facts that warrant an investigation,” Mr. Sanderson said.“I don’t know whether there is a violation, but it is certainly the type of facts that motivated the passage of the STOCK Act in the first place, and they are certainly the type of facts that warrant an investigation,” Mr. Sanderson said.
Mr. Burr has not disputed that he received confidential information during his briefings or that he directed the trades, Mr. Sanderson said. Mr. Burr was one of only three senators to vote against the legislation, calling the law unnecessary because insider trading is already banned by other laws. He boasted to a North Carolina radio station at the time that he was one of three “brave souls that walked up and said we shouldn’t be doing this.”
Publicly available disclosures show that Mr. Burr and his wife sold a total of 33 different stocks on Feb. 13, worth a collective $628,000 to $1.7 million. The sales included as much as $150,000 in stock in two hotel chains, Wyndham Hotels and Resorts and Extended Stay America. Both companies have seen their stock value decline rapidly in recent weeks. Publicly available disclosures show that the stock sales by Mr. Burr and his wife included as much as $150,000 in stock in two hotel chains, Wyndham Hotels and Resorts and Extended Stay America. The stock value of both companies has declined rapidly in recent weeks.
The sales came at a time when President Trump and members of Mr. Burr’s party were playing down the virus’s threat and accusing Democrats of overreacting. Mr. Burr seems to have taken a more cautious approach, warning Americans and his constituents about a possible pandemic, but also reassuring them that the government was well equipped to keep them safe. As of 2018, the period covered by his most recent financial disclosure report, Mr. Burr had a net worth of about $1.7 million, making him the 154th wealthiest member of Congress, out of the 530 examined by Roll Call in an annual report on lawmakers and their assets.
The political pressure on Mr. Burr, who has long planned to retire at the end of 2022, began on Thursday when news reports about the sales first surfaced. While it may be difficult to prove whether Mr. Burr’s actions were legal one way or another, it is a subject fraught with political peril at a time when Americans have seen their lives and livelihoods upended by the pandemic and are looking to Washington for a rescue. This means his sale on Feb. 13 represented a large share of his wealth; other than his stock portfolio, his assets consisted of real estate in Winston-Salem and Nags Head, N.C., and various bank accounts worth at least $802,000.
Senator Thom Tillis, a Republican up for re-election this fall in Mr. Burr’s home state of North Carolina, insisted that his senatorial colleague give a fuller explanation and said that it was right for the Ethics Committee to investigate. It was not the first time that Mr. Burr had moved suddenly to protect his wealth.
“Given the circumstances, Senator Burr owes North Carolinians an explanation,” Mr. Tillis said on Twitter. “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.” In 2008, after he heard the Treasury secretary at the time, Henry M. Paulson, talk about challenges banks were facing — as the nation was entering a recession — he called his wife and told her to withdraw as much cash as possible from their bank accounts, Mr. Burr told supporters during a speech in North Carolina.
At the White House, Mr. Trump declined to pass judgment, saying he did not “know too much what it is.” “I want you to go to the A.T.M., and I want you to draw out everything it will let you take,” Mr. Burr said, according to an account in The Hendersonville Times-News and The Hill newspaper.
“But I find them all to be honorable people,” he said. “They said they did nothing wrong.” Mr. Burr trades relatively often on his holdings, filing 17 different “periodic transaction reports” last year, which are required when lawmakers buy or sell a stock. But most of these other transactions involved just a couple of purchases or sales, instead of a comprehensive and sudden sale of most of his holdings.
Mr. Trump was referring to the fact that several other senators — including Senator Kelly Loeffler, Republican of Georgia — also placed substantial trades in the weeks before the virus began to directly affect Americans and the markets here. Mr. Burr’s sales were larger as a proportion of his net worth. The Feb. 13 stock sales by Mr. Burr came a week after he wrote an opinion article for Fox News suggesting that the United States was “better prepared than ever before” to confront the virus, in part because of legislation he had sponsored more than a decade ago called the Pandemic and All-Hazards Preparedness Act intended to help prepare for such a threat.
The Democratic Party in Mr. Burr’s home state said on Friday that he had violated the public’s trust. But Mr. Burr was clearly worried about the threat presented by the coronavirus. He told a group of North Carolina residents gathered last month at the Capitol Hill Club in Washington that the effect would be severe.
“While leaders stood up and North Carolinians prepared for the worst, Senator Richard Burr used his position and access to highly sensitive information to profit by selling stock just a week before the market crashed due to a deadly virus sweeping our nation,” the state party said. “There’s one thing that I can tell you about this: It is much more aggressive in its transmission than anything we have seen in recent history,” Mr. Burr said, according to a recording obtained by NPR, which reported on his remarks on Thursday.
It also called for a Justice Department investigation to determine whether the senator had violated the law. Though as Intelligence Committee chairman he is entitled to additional one-on-one sessions with intelligence officials beyond what other senators hear, Mr. Burr does not appear to have requested any, according to two of the people familiar with the committee’s work, who were not authorized to discuss it publicly.
Some conservative commentators, including Fox News’s Tucker Carlson, have made similar demands. Sessions organized by the health committee that Mr. Burr attended were not classified and largely rehashed publicly available information about the virus, according to Senate aides involved. They were intended to prepare senators for the possibility that they might need to help draft a response if and when the virus arrived in the United States.
Senator Mitch McConnell, Republican of Kentucky and the majority leader, declined to answer questions about Mr. Burr in the Capitol on Friday. The four other senators each also made significant stock sales between late January and late February at a time when senators were regularly briefed on the virus’s spread. Three of them — Ms. Loeffler, Mr. Perdue and Mr. Inhofe — said that they employed outside financial advisers to buy and sell stocks without their consultation and only learned about the sales after they were completed. Ms. Feinstein said the holdings were controlled by her husband or in a blind trust.
Emily Cochrane contributed reporting. A review of 109 financial disclosure forms filed by 47 members of the House underscores how unusual Mr. Burr’s actions were. While the financial transactions of a few lawmakers were too complex to easily analyze, in general the review produced little indication that lawmakers bailed out of the market before ordinary citizens did.
Only a handful of lawmakers reported the sale of stocks worth hundreds of thousands of dollars from mid-January through late February, and many of those sales were offset by other stock purchases.
Mr. Burr’s sales drew by far the most intense backlash, even from within his own party.
Senator Thom Tillis, a Republican up for re-election this fall in Mr. Burr’s home state of North Carolina, insisted that his colleague give a fuller accounting and said that it was right for the Ethics Committee to investigate.
“Given the circumstances, Senator Burr owes North Carolinians an explanation,” Mr. Tillis said on Twitter.
Mark Walker and Matthew Rosenberg contributed reporting.