Stock sales by Sen. Richard Burr, others ignite political uproar

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WASHINGTON — The nation remained fixated on the final acts of the impeachment drama in early February, but as the Senate prepared to acquit President Donald Trump, Sen. Richard Burr, R-North Carolina, the chairman of the Intelligence Committee, already had his eye on a troubling new threat: the coronavirus.

On the morning of Feb. 4, 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.

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 CIA painted an early picture of the outbreak’s geopolitical implications.

Around the same time, 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 next day, Feb. 13, Burr sold off 33 stock holdings, worth a collective $628,000 to $1.7 million, liquidating a large share of his portfolio.

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 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.

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 Burr, the other senators said they did nothing wrong and were not acting on information unavailable to the general public.

The stock sale ignited a political firestorm from both the left and the right, as calls immediately emerged for the resignation of 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, Burr said Friday 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,” Burr said in statement.

The four other senators — Dianne Feinstein, D-California, James Inhofe, R-Oklahoma, Kelly Loeffler, R-Georgia, and David Perdue, R-Georgia — have each rejected any suggestion that they played any role in the stock sales, saying that their portfolios are managed by others and that they were perhaps not even aware the securities were being sold.

But Burr has not disputed that he was involved in the decision, nor that it was motivated by a fear that markets in the U.S. 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, Burr was frequently briefed by national security and health officials on threats to the U.S., 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 Sanderson, a lawyer who advises members of Congress and candidates and who is a Republican, said the actions by 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,” Sanderson said.

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 the stock sales by 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.

As of 2018, the period covered by his most recent financial disclosure report, 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.

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, North Carolina, and various bank accounts worth at least $802,000.

It was not the first time that Burr had moved suddenly to protect his wealth.

In 2009, after he heard the Treasury secretary at the time, Henry 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, Burr told supporters during a speech that year in North Carolina.

“I want you to go to the ATM, and I want you to draw out everything it will let you take,” Burr said, according to an account in the Hendersonville Times-News and the Hill newspaper.

Burr trades relatively often on his holdings, filing 17 “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.

The Feb. 13 stock sales by Burr came a week after he wrote an opinion article for Fox News suggesting that the U.S. 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.

But 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.

“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,” Burr said, according to a recording obtained by NPR, which reported on his remarks Thursday.

Though as Intelligence Committee chairman he is entitled to additional one-on-one sessions with intelligence officials beyond what other senators hear, 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.

Sessions organized by the health committee that 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 U.S.

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 — Loeffler, Perdue and 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. Feinstein said the holdings were controlled by her husband or in a blind trust.

A review of 109 financial disclosure forms filed by 47 members of the House underscores how unusual 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.

Burr’s sales drew by far the most intense backlash, even from within his own party.

Sen. Thom Tillis, a Republican up for reelection this fall in 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,” Tillis said on Twitter.

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