Burr sued over controversial stock sales
Posted March 24, 2020 11:33 a.m. EDT
Updated March 24, 2020 7:16 p.m. EDT
Washington — A shareholder in Wyndham Hotels is suing U.S. Sen. Richard Burr over the North Carolina Republican's decision to sell up to $150,000 of Wyndham stock last month before the coronavirus outbreak caused the stock to lose more than half of its value.
Alan Jacobson accused Burr in the federal lawsuit, which was filed Monday, of violating the Stop Trading on Congressional Knowledge, or STOCK, Act. Congress passed the measure in 2012, making it illegal for members to profit financially from inside information they receive. Burr was one of only three senators to vote against it.
Burr unloaded up to $1.7 million in publicly traded stocks on Feb. 13, weeks before the stock market cratered over the growing coronavirus outbreak.
After the sales came to light last week, people from across the political spectrum questioned whether Burr had inside information about the coronavirus' potential impact on the U.S. economy through his role as chairman of the Senate Intelligence committee, which received a Jan. 24 briefing on the virus from administration officials.
Two of the 33 separate sales on Feb. 13 were of Wyndham stock. Jacobson's lawsuit states that the stock was trading at more than $59 a share that day.
"Over the next several weeks, Wyndham’s stock dropped precipitously as the market was belatedly informed of the severity of COVID-19, as well as its potential expected impact on the economy. In particular, Wyndham, as a hotel chain, obviously stood to lose substantial business as a result of quarantine measures, border closures, and substantial reductions in tourism," the lawsuit states.
Wyndham was trading at close to $28 a share on Tuesday, up sharply from a low of $14.50 a share last week.
Less than a week before the stock sales, Burr assured the public of the nation's preparedness for what has become a global pandemic.
Calling Burr "a scofflaw in a time of national crisis," Jacobson alleges in the lawsuit that the senator "owed a duty ... 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."
Burr has said that he "relied solely on public news reports" to guide his decision to sell stocks and that he followed "CNBC's daily health and science reporting out of its Asia bureaus at the time."
But he also said he understands "the assumption many could make in hindsight" and has called for the Senate Ethics committee "to open a complete review of the matter with full transparency."
Other U.S. senators are also under fire for recent financial activities. Republicans Kelly Loeffler of Georgia and Jim Inhofe of Oklahoma and Democrat Dianne Feinstein of California all reported stock sales after the Senate Intelligence briefing. Feinstein said her stock is in a blind trust, meaning she doesn't manage it.