The SEC is reportedly looking into a senator and his brother-in-law dumping stock ahead of the COVID-19 market crash
- The SEC is investigating whether Sen. Richard Burr and his brother-in-law traded off of inside information ahead of the COVID-19 market crash, according to ProPublica.
- Gerald Fauth reportedly called his broker to sell stock a minute after getting off the phone with Burr.
- The stock market soon after experienced its fastest bear market ever, with the S&P 500 falling 35% in five weeks.
Sen. Richard Burr and his brother-in-law, Gerald Fauth, are under investigation by the Securities and Exchange Commission for insider trading, according to a ProPublica report.
While chairman of the Senate Intelligence Committee in February 2020, Burr was briefed about the significant threat COVID-19 posed to the US economy, which was non-public material information at the time
After the briefing, the North Carolina Republican sold stocks and then called Fauth. Just one minute after that phone call, Fauth called his broker to sell stocks, according to the report, which cited filings made by the SEC.
The trades occurred on February 13, when Fauth sold between $97,000 and $280,000 worth of shares in six companies, including several that were eventually hit hard by the economic downturn caused by COVID-19. Burr himself had sold more than $1.6 million worth of stocks, according to the report.
Days later, the S&P 500 topped out on February 19 and then crashed, experiencing its fastest bear market on record. The index tumbled as much as 35% in about five weeks as investors sized up the devastating impact COVID-19 would have on the economy.
The SEC's filings come as the agency seeks to compel Fauth to comply with a subpoena that he has dodged for more than a year, citing a medical condition. That's despite Fauth's continued work at the National Mediation Board, which he was appointed to in 2017 by then-President Donald Trump. President Biden reappointed him to the board.
The irony of it all is had Burr and Fauth held onto their shares, they would have been well rewarded, given that the market has since surged more than 100% to record highs.
In response to prior reports about Burr's early 2020 trading activity, his attorney told ProPublica that "Senator Burr participated in the stock market based on public information and he did not coordinate his decision to trade on February 13 with Fauth."