A number of media reports recently insinuated that several lawmakers in Congress, particularly Senate Intelligence Committee Chairman Richard Burr (R-NC), had potentially engaged in prohibited insider trading by selling off certain stocks after privately learning of the impending coronavirus outbreak and the resultant stock market decline and before the general public was made aware of it.
Those accusations have now led to a lawsuit filed in federal court against Sen. Burr alleging that he committed securities fraud by dumping potentially more than a million dollars of stocks hotel stocks about a week prior to the coronavirus market downturn and after he was made privy to official briefings on the impending public health crisis, Breitbart reported.
Shareholder suit filed
The lawsuit was filed by a shareholder of the Wyndham Hotels and Resorts who accused Burr of utilizing nonpublic insider information to sell his stocks and avoid the significant loss in stock value that other shareholders ultimately suffered a short time later.
Politico reported that Burr appeared to have sold somewhere between $628,000 and $1.72 million worth of stocks in mid-February after receiving classified briefings about the growing global pandemic that would soon wreak havoc on the U.S. and force a virtual shutdown of the economy.
Of those stocks sold at that time, roughly $150,000 of the total represented Burr’s stake in Wyndham, which has since seen its stock value plummet by nearly two-thirds.
Meanwhile, Burr was publicly offering the American people reassurances that the nation was prepared to withstand the impending public health crisis.
Barr accused of insider trading
“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,” stated the lawsuit filed by Wyndham shareholder Alan Jacobson in the U.S. District Court for the District of Columbia.
“Had Plaintiff and the market known of the material nonpublic information in Senator Burr’s possession regarding COVID-19, and on which Senator Burr traded, Wyndham’s stock price on February 13, 2020 would have been substantially lower,” Jacobson’s lawsuit alleged.
The plaintiff added, “Senator Burr and his wife sold up to $150,000 of Wyndham stock on that date, and therefore he and his wife pocketed up to $150,000 in illegal insider trading proceeds at Plaintiff’s expense.”
Jacobson’s argument revolves around the assertion that the shares he continued to hold were artificially inflated in value due to the lack of public knowledge about the impending decline in the market due to coronavirus, which caused him financial harm that Burr avoided because of his insider understanding that wasn’t shared with others.
Senator denies wrongdoing
Breitbart noted that, for his part, Burr has denied any sort of wrongdoing related to his mid-February stock sell-off. He further claimed that he relied solely on “public news reports” ahead of the sales and has requested the Senate Ethics Committee to do a thorough review of the circumstances surrounding the transactions.
It remains to be seen how this lawsuit against Burr will play out in the federal courts. In the meantime, Burr is facing calls that he step down from his committee chairmanship and even resign from the Senate altogether.