(CN) – Senator Richard Burr, one of several senators who dumped hundreds of thousands of dollars worth of stock ahead of the coronavirus pandemic, is being sued by a member of the public for allegedly violating securities laws.
Ob Feb. 13, Burr sold between $628,000 and $1.72 million worth of stock, including up to $150,000 in Wyndham Hotels & Resorts, according to the federal complaint brought by Alan Jacobson on Monday in in Washington.
Jacobson, who holds stock in Wyndham, says Burr had advanced warning of the looming public health crisis. As a member of the Senate Health Committee, Burr was party to a private briefing about the coronavirus outbreak on Jan. 24, 2020.
On Feb. 7, Burr, a Republican representing North Carolina, was quoted by Fox News assuring the public that all was well. “The United States today is better prepared than ever before to face emerging public health threats like the coronavirus,” he said.
But a week later, Burr and his wife made 33 separate stock sale transactions, Jacobson’s lawsuit says, dumping stock in companies such as Abbvie to FedEx. Jacobson’s complaint also notes the sale of shares in various hotel groups such as Wyndham Resorts, Extended Stay America, and Park Hotels & Resorts Inc.
Burr dumped his Wyndham stock at a high of $59.37. But as the pandemic became ever more of a global threat, the hotel company’s stock price dwindled, falling to $20.61 by March 19.
“Senator Burr’s knowledge of the devastating impact of COVID-19 on the United States, the mitigation measures that would be taken in efforts to curtail its spread, and the coming hit to the economy is evident not only by the fact that he received confidential briefings on COVID-19 and then sold all of the shares he held in the stock market but by comments he made to a small group of private investors,” Jacobson’s complaint says.
On Feb. 27, Burr spoke at a private luncheon hosted by the Tar Heel Circle in North Carolina, warning some wealthy constituents that a financial crisis lay ahead.
Quoting news reports about that meeting, the lawsuit says: “He warned them they should prepare for dire economic and societal effects from the spread of COVID-19. Senator Burr advised the attendees at the luncheon: ‘Every company should be cognizant of the fact that you may have to alter your travel. You may have to look at your employees and judge whether the trip they’re making to Europe is essential or whether it can be done on video conference. Why risk it?’”
Jacboson claims Burr violated the both Securities & Exchange Commission Rule 10b-5 and Section 10(b) of the Exchange Act, also known as the Stock Act, which prohibits members of Congress from profiting off of non-public information. Jacobson is seeking compensatory damages.
News broke last week that Burr had possibly used private information about the pandemic to his own financial advantage. The senator defended himself in a statement, saying that he had relied only on public news reports in making the transactions. NPR reported that Burr called on the Senate Ethics Committee to review his financial records. Burr also chairs the Senate Intelligence Committee.
Senator Dianne Feinstein, D-Calif., also a member of the Senate Intelligence Committee, dumped between $1.5 million and $6 million in stocks in Allogene Therapeutics between Jan. 23 and Feb. 18. She said her husband made those transactions and claimed through a spokesman that her assets are in blind trust and she has no involvement in her spouse’s financial decisions.
The New York Times also reported last week that Senator Kelly Loeffler, R-Ga., and her husband Jeffrey Sprecher, who is the chairman of the New York Stock Exchange, sold off stock in late January in companies ranging from Exxon Mobil to Ross Stores. Loeffler also purportedly attended the same Jan. 24 Senate briefing as Burr.
A late January stock sale made by Senator Jim Inhofe, R-Okla., has also drawn public ire. Inhofe told local paper Tulsa World that the sale had nothing to do with inside information related to coronavirus.
The Grand Forks Herald also reported that Senator John Hoeven, R-N.D., invested in BlackRock Health Sciences Trust II fund on Jan. 29, 2020 after attending the coronavirus briefing, though he did send out a press release after the briefing to warn constituents.