Senate Intel Chair Steps Down After Dumping Stocks Pre-Pandemic. How'd We Get Here?

Sen. Richard Burr of North Carolina has been under scrutiny for months for possible insider trading related to the coronavirus pandemic. This week, the FBI seized his phone as part of the investigation.

Sen. Richard Burr attends a Senate Health Committee hearing on Capitol Hill on May 12, 2020 in Washington, D.C. (Photo by Win McNamee/Getty Images)
Sen. Richard Burr attends a Senate Health Committee hearing on Capitol Hill on May 12, 2020 in Washington, D.C. (Photo by Win McNamee/Getty Images)

Sen. Richard Burr (R-NC) announced he's stepping down from his position as chairman of the Senate Intelligence Committee Thursday, one day after the FBI seized his phone as part of an investigation into whether he committed insider trading related to the coronavirus pandemic. Burr has been under scrutiny for months because of a curiously timed stock sale worth hundreds of thousands of dollars on Feb. 13 that came days after he received private briefings exclusive to senators forecasting the risk nationwide from COVID-19.

It is illegal for members of Congress to sell or buy stocks based on information that isn’t available to the public, under the Stock Act.

The Los Angeles Times reported Wednesday that Burr turned over his phone to FBI agents after they executed a search warrant at his home in the Washington, D.C. area. The search and seizure was later confirmed by multiple news outlets.

When announcing the decision to step down Thursday, Burr said the investigation is “a distraction to the hard work of the [Senate Intel] committee, and the members and I think that the security of the country is too important to have a distraction.” According to the New York Times, “he declined to discuss the case further but said he was cooperating with the authorities.” Senate Majority Leader Mitch McConnell (R-KY) said he agreed “this decision would be in the best interests of the committee and will be effective” by the end of Friday. The move is temporary, pending the results of the FBI investigation.

Burr and his wife sold 33 stocks on Feb. 13 collectively worth between $628,000 to $1.7 million, according to documents later filed with the Senate. ProPublica and the Center for Responsive Politics first reported the sales in March. The sales included hundreds of thousands of dollars worth of stock in multiple hotel chains, including Wyndham Hotels and Resorts and Extended Stay America. The hotel industry was eventually hit hard by the response to the outbreak, and the values of both companies fell significantly between March and April, when President Trump announced travel restrictions and a state of emergency, data shows. The Wall Street Journal has estimated that the Burrs saved at least $250,000 in losses through the sale.

Yet in early February, the Trump administration and GOP leaders were downplaying the severity of the outbreak, even after receiving closed-door briefings as early as January that indicated the situation could become much worse in America. Multiple reports say the briefings that Burr attended — and he received ones daily as Senate Intel chairman — specifically included conversations about how the economy could be hurt by the health crisis. 

On Feb. 7, Burr co-wrote an op-ed with another Republican senator for Fox News in which they said the U.S. was “better prepared than ever before” to deal with the new coronavirus. But less than a week later, he was selling stocks—and he wasn’t the only one. The Times reported that “at least three other senators sold major stock holdings around the same time,” according to disclosure records. Burr’s brother-in-law also sold stocks around the same time.

Federal law enforcement authorities have also been in touch with Sen. Kelly Loeffler (R-GA) and Sen. Dianne Feinstein (D-CA), who similarly dumped stock in the early days of the outbreak in the U.S. According to records cited by The Washington Post, “Feinstein and her husband sold between $1.5 million to $6 million worth of stock between Jan. 31 and Feb. 18.” A spokesperson for Feinstein said her husband made the sales without her knowledge. FBI agents have questioned the California senator.

Loeffler sold stocks jointly owned with her husband worth between $1.275 and $3.1 million between Jan. 24 and Feb. 14, according to Senate disclosures. Jan. 24 is the day top administration officials held a briefing for all interested senators on coronavirus. Burr did not buy any stocks when he made his sales, but Loeffler bought stock in two tech companies that provide cloud computing and/or teleconferencing services on Feb. 14 as she dumped others.

The Georgia senator has defended herself by saying “multiple third-party advisers” made the investment decisions without she or her husband’s knowledge. Loeffler is estimated to be the wealthiest member of Congress by a long shot, with a net worth of $500 million.

As for the suspect timing of all of these sales, in addition to the proximity to the senators-only briefings, there's other important context: the Dow Jones index closed at its highest-ever point on Feb. 12. The market wasn't suffering then. It “wouldn’t begin dropping for more than a week afterward,” the Post noted in a detailed timeline of the Burr and Loeffler developments.

Sen. James Inhofe (R-OK) sold as much as $400,000 worth of stock on Jan. 27, documents show. He also said he wasn’t involved in the sales, and a spokesperson said he did not attend the Jan. 24 briefing.

Burr may be receiving more scrutiny because he has said he made the sales himself, unlike the others. Observers of Trump’s Justice Dept. note that something else could be at play as well: as Times reporters put it, “Burr has had a chilly relationship with the White House as his [Senate committee] investigates Russia’s interference in the 2016 election.” Burr's last act as Intel Chairman Friday was submitting the committee's fifth and final volume of its investigative report on Russian interference for review by the intelligence community. President Trump has lashed out at Burr several times over the past few years for his role in the investigation.

In recent weeks, the president has successfully gotten the Justice Dept. led by Attorney General Bill Barr to drop the case of disgraced former national security adviser Michael Flynn, who Trump has been trying to exonerate for years.

AG Barr had to sign off on the search warrant for Burr himself, under Justice Dept. protocol for investigations into sitting senators—and journalists have noted the various ways Barr has been the one executing Trump’s “Mueller revenge play.” According to the Times, “Some of Mr. Burr’s allies in the Senate privately questioned on Thursday why the search warrants became public if Mr. Burr was cooperating.”

Burr was one of just three senators to vote against the Stock Act in 2012, which passed 96-3 and banned insider trading in Congress. He called it “insane” and “ludicrous” at the time.