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Caught Dumping Stocks, Sen. Burr Requests Ethics Investigation

Reprinted with permission from ProPublica.

Sen. Richard Burr, the powerful chairman of the Senate Intelligence Committee, requested a Senate Ethics Committee investigation into his stock trading, a day after ProPublica and the Center for Responsive Politics reported that he had dumped significant amounts of shares before the market crash triggered by the coronavirus outbreak.

Burr unloaded between $628,000 and $1.72 million of his holdings on Feb. 13 in 33 separate transactions, a significant portion of his total stock holdings. The sales came soon after he offered public assurances that the government was ready to battle the coronavirus.

On Twitter Friday morning, Burr defended the sell-off. “I relied solely on public news reports to guide my decision regarding the sale of stocks on February 13,” he said. “Specifically, I closely followed CNBC’s daily health and science reporting out of its Asia bureaus at the time.” He asked for the ethics committee to “open a complete review of the matter with full transparency.”

The ethics committee can recommend disciplinary action against lawmakers and refer potentially criminal violations to law enforcement. But it has been criticized for being too lax. It is illegal for members of Congress to trade shares on non-public information they gather in the course of their work. But cases are rare because proving that a politician relied on such non-public information is difficult.

As the head of the intelligence committee, Burr, a North Carolina Republican, has access to the government’s most highly classified information about threats to America’s security. His committee was receiving daily coronavirus briefings around this time, according to a Reuters story.

A week after Burr’s sales, the stock market began a sharp decline and has lost about 30% since.

After the story published, Burr faced a firestorm of criticism from both sides of the aisle. Former Obama administration officials along with prominent Trump allies blasted Burr’s stock sales. Calls for his resignation came from both ends of the political spectrum, including Rep. Alexandria Ocasio-Cortez, D-N.Y., and the Fox News host Tucker Carlson.

Thom Tillis, North Carolina’s junior senator, said on Friday that a review by the ethics committee was warranted. “Given the circumstances, Senator Burr owes North Carolinians an explanation,” Tillis, a Republican, wrote.

Throughout the day Thursday, news outlets reported instances of other lawmakers who also sold off stock before the market tanked.

The Daily Beast reported that Kelly Loeffler, a Georgia Republican who took office this year, sold off stocks jointly owned with her husband worth between $1.2 million and $3.1 million in the weeks after senators received a private briefing on the coronavirus from the Trump administration. Loeffler’s husband is the chairman of the New York Stock Exchange. In response, Loeffler posted on Twitter early on Friday morning that “this is a ridiculous and baseless attack. I do not make investment decisions for my portfolio. Investment decisions are made by multiple third-party advisors without my or my husband’s knowledge or involvement.”

Other senators who sold off stocks this year include Jim Inhofe, the Oklahoma Republican who chairs the Armed Services Committee. Reports with the Senate show that Inhofe sold shares worth between $380,000 and $830,000 both before and after the briefing, which Inhofe did not attend. “I do not have any involvement in my investment decisions,” Inhofe posted on Twitter on Friday. “In December 2018, shortly after becoming chairman of the Senate Armed Services Committee, I instructed my financial advisor to move me out of all stocks and into mutual funds to avoid any appearance of controversy.”

Reports of sales by other senators surfaced as well. But those sales were less anomalous or noteworthy. Sen. Ron Johnson, a Wisconsin Republican, reported selling shares in a private firm he ran, Pacur LLC, worth between $5 million and $25 million. That transaction took place on March 2. The deal had apparently been in the works for some time and had been announced on Feb. 11.

In another case generating headlines, filings also show large sales reported by Sen. Dianne Feinstein, the California Democrat who serves on the Intelligence Committee alongside Burr. But they only involved one stock. Feinstein’s husband, Richard Blum, sold off shares in Allogene Therapeutics Inc. worth between $1.5 million and $6 million on Jan. 31 and Feb. 18. Blum is a frequent stock trader, according to Feinstein’s financial disclosures, and appears to have taken a loss on at least a portion of the shares he sold.

Asked about senators making stock trades at a press conference Friday, President Trump said “I’m not aware of it, I saw some names.”

He added, “I find them to all be very honorable people, that’s all I know and they said they did nothing wrong.” The only senator he addressed by name was Dianne Feinstein, and complained that reporters at the press conference were not noting her stock trades.

By the standards of the Senate, Burr is not particularly wealthy: Roll Call estimated his net worth at $1.7 million in 2018, indicating that the February sales significantly shaped his financial fortunes and spared him from some of the pain that many Americans are now facing.

He was one of the authors of the Pandemic and All-Hazards Preparedness Act, which shapes the nation’s response to public health threats like the coronavirus. Burr’s office did not respond to requests for comment about what sort of briefing materials, if any, on the coronavirus threat Burr may have seen as chair of the intelligence committee before his selling spree.

According to NPR, Burr had given a VIP group at an exclusive social club a much more gloomy preview of the economic impact of the coronavirus than what he had told the public, saying it might close schools and impede business travel. In response, Burr said the NPR report was misleading.

Burr’s public comments had been considerably more positive. In a Feb. 7 op-ed that he co-authored with another senator, he assured the public that “the United States today is better prepared than ever before to face emerging public health threats, like the coronavirus.” He wrote, “No matter the outbreak or threat, Congress and the federal government have been vigilant in identifying gaps in its readiness efforts and improving its response capabilities.”

Members of Congress are required by law to disclose their securities transactions.

Burr was one of just three senators who in 2012 opposed the bill that explicitly barred lawmakers and their staff from using nonpublic information for trades and required regular disclosure of those trades. In opposing the bill, Burr argued at the time that insider trading laws already applied to members of Congress. President Barack Obama signed the bill, known as the STOCK Act, that year.

Stock transactions of lawmakers are reported in ranges. Burr’s Feb. 13 selling spree was his largest stock selling day of at least the past 14 months, according to a ProPublica review of Senate records. Unlike his typical disclosure reports, which are a mix of sales and purchases, all of the transactions were sales.

His biggest sales included companies that are among the most vulnerable to an economic slowdown. He dumped up to $150,000 worth of shares of Wyndham Hotels and Resorts, a chain based in the United States that has lost two-thirds of its value. And he sold up to $100,000 of shares of Extended Stay America, an economy hospitality chain. Shares of that company are now worth less than half of what they did at the time Burr sold.

The assets come from accounts that are held by Burr, belong to his spouse or are jointly held.

IMAGE: Senator Richard Burr (R-NC).

While Assuring Public On Virus, Sen. Burr Dumped $1.6M In Stocks

Reprinted with permission from ProPublica.

Soon after he offered public assurances that the government was ready to battle the coronavirus, the powerful chairman of the Senate Intelligence Committee, Richard Burr, sold off a significant percentage of his stocks, unloading between $628,000 and $1.72 million of his holdings on Feb. 13 in 33 separate transactions.

As the head of the intelligence committee, Burr, a North Carolina Republican, has access to the government’s most highly classified information about threats to America’s security. His committee was receiving daily coronavirus briefings around this time, according to a Reuters story.

A week after Burr’s sales, the stock market began a sharp decline and has lost about 30 percent since.

On Thursday, Burr came under fire after NPR obtained a secret recording from Feb. 27, in which the lawmaker gave a VIP group at an exclusive social club a much more dire preview of the economic impact of the coronavirus than what he had told the public.

“Senator Burr filed a financial disclosure form for personal transactions made several weeks before the U.S. and financial markets showed signs of volatility due to the growing coronavirus outbreak,” his spokesperson said. “As the situation continues to evolve daily, he has been deeply concerned by the steep and sudden toll this pandemic is taking on our economy.”

Burr is not a particularly wealthy member of the Senate: Roll Call estimated his net worth at $1.7 million in 2018, indicating that the February sales significantly shaped his financial fortunes and spared him from some of the pain that many Americans are now facing.

He was one of the authors of the Pandemic and All-Hazards Preparedness Act, which shapes the nation’s response to public health threats like the coronavirus. Burr’s office did not respond to requests for comment about what sort of briefing materials, if any, on the coronavirus threat Burr may have seen as chair of the intelligence committee before his selling spree.

According to the NPR report, Burr told attendees of the luncheon held at the Capitol Hill Club: “There’s one thing that I can tell you about this: It is much more aggressive in its transmission than anything that we have seen in recent history … It is probably more akin to the 1918 pandemic.”

He warned that companies might have to curtail their employees’ travel, that schools could close and that the military might be mobilized to compensate for overwhelmed hospitals.

The luncheon was organized by the Tar Heel Circle, a club for businesses and organizations in North Carolina that are charged up to $10,000 for membership and are promised “interaction with top leaders and staff from Congress, the administration, and the private sector.”

Burr’s public comments had been considerably less dire. In a Feb. 7 op-ed that he co-authored with another senator, he assured the public that “the United States today is better prepared than ever before to face emerging public health threats, like the coronavirus.” He wrote, “No matter the outbreak or threat, Congress and the federal government have been vigilant in identifying gaps in its readiness efforts and improving its response capabilities.”

Members of Congress are required by law to disclose their securities transactions.

Burr was one of just three senators who in 2012 opposed the bill that explicitly barred lawmakers and their staff from using nonpublic information for trades and required regular disclosure of those trades. In opposing the bill, Burr argued at the time that insider trading laws already applied to members of Congress. President Barack Obama signed the bill, known as the STOCK Act, that year.

Stock transactions of lawmakers are reported in ranges. Burr’s Feb. 13 selling spree was his largest stock selling day of at least the past 14 months, according to a ProPublica review of Senate records. Unlike his typical disclosure reports, which are a mix of sales and purchases, all of the transactions were sales.

His biggest sales included companies that are among the most vulnerable to an economic slowdown. He dumped up to $150,000 worth of shares of Wyndham Hotels and Resorts, a chain based in the United States that has lost two-thirds of its value. And he sold up to $100,000 of shares of Extended Stay America, an economy hospitality chain. Shares of that company are now worth less than half of what they did at the time Burr sold.

The assets come from accounts that are held by Burr, belong to his spouse or are jointly held.

Correction, March 19, 2020: This story about Sen. Richard Burr’s stock sales originally misstated the amount and the number of transactions. Burr sold between $628,000 and $1.72 million in 33 separate transactions, not between $582,029 and $1.56 million of his holdings in 29 separate transactions.

Do you have access to information about the coming corporate and economic bailouts that should be public? Email Robert at robert.faturechi@propublica.org or reach him on Signal/WhatsApp at 213-271-7217. Here’s how to send tips and documents to ProPublica securely.

The Continuing Financial Muddle At A Pro-Trump Political Committee

Reprinted with permission from ProPublica.

A political action committee that backed Donald Trump’s bid for the presidency is continuing to flout campaign finance laws.

Earlier this month, ProPublica reported that the America Comes First PAC had violated the rules by not disclosing the source of its funding before Election Day and by exceeding caps on contribution amounts.

America Comes First gave $115,000 to Trump Victory, a group that raised money for the Trump campaign and for national and state-level Republican groups. It now ranks as the second-biggest PAC contributor to Trump Victory, according to a list compiled by the nonprofit Center for Responsive Politics — behind GEO Group, a private prison company.

After the ProPublica article was published, the treasurer of the PAC, David Schamens, said the group’s filings with the Federal Election Commission were inaccurate, and that they would be amended. Last week they were — but the amended filing includes new irregularities.

For example, the original filing lists Schamens as the top donor to the PAC. The new documents show the top donor as Tradedesk Financial, a firm that lists an address on Wall Street. (Schamens didn’t respond to questions about Tradedesk Financial or other information in the new filings. One online record indicates that a woman named Piliana Schamens was linked to Tradedesk in 2010.) However, a PAC is not permitted to receive direct corporate support. Perhaps recognizing that restriction, America Comes First’s new filings now identify the group as a super PAC, meaning that moving forward, it can receive unlimited corporate money.

Yet declaring itself a super PAC created a new problem for America Comes First, because super PACs can’t donate directly to a political campaign such as Trump Victory. A super PAC can make independent expenditures, such as on advertisements that support a candidate, but those can’t be made in coordination with the campaign. To reconcile this problem in its new filings, America Comes First reclassified the $115,000 it gave as independent expenditures. Yet the payee is still Trump Victory, meaning the expense went to a campaign — in violation of the rules for super PACs.

Schamens, who attended an October fundraiser with Trump as federal regulators waited for any disclosure from his PAC, was accused by the Securities and Exchange Commission of securities fraud in the early 1990s. In a settlement, he did not admit to the allegations but agreed to be barred from associating with investment companies or securities brokers. Schamens currently is director of a New Jersey technology company that optimizes and expedites securities trading for financial institutions and traders.

In an interview with ProPublica before the amended filing, Schamens said that among the concerns he related to the Trump camp was the over-enforcement of securities regulations since 2008.