SEC probe of Richard Burr still alive?
Having a Department of Justice and Securities Exchange Commission (SEC) manned with people from your own party sure helps. Inconvenient situations can simply go away. But when the other party takes over, things might not be so much fun.
Pre-pandemic insider trading allegations hit senator Richard Burr some time back. But that was during the Republican Trump administration. Now, the Democrats are in charge in DC and we’ve learned that Burr’s investing activities with his brother-in-law deserve another look and continued investigation:
A federal judge on Friday said he was inclined to require Sen. Richard Burr’s brother-in-law to testify in an investigation that examines whether the two men engaged in insider trading.
The brother-in-law, Gerald Fauth, could potentially provide testimony to the Securities and Exchange Commission, which asked the court to intervene and order it, U.S. District Judge Andrew L. Carter Jr. said during a hearing. Mr. Fauth’s lawyers have said their client’s unwillingness to comply with a May 2020 SEC subpoena stems from serious health issues that could be worsened by stressful situations.
Judge Carter suggested Mr. Fauth could sit and answer the SEC’s questions for brief periods over a series of days. Breaking up the testimony “may be a possible solution to this,” Judge Carter said.
The SEC has been investigating possible insider trading by Mr. Burr, a North Carolina Republican, and Mr. Fauth since March 2020, according to court records. The SEC has said Mr. Fauth has “waged a relentless battle to avoid” complying with the SEC subpoena issued in May 2020 for his testimony, according to court records.
Regulators say Mr. Burr got material nonpublic information about the Covid-19 pandemic through detailed briefings given to lawmakers. He may have illegally used that information in February 2020 when he sold virtually all of the stock he owned in a retirement account, the SEC says in court records.
Mr. Burr sold shares of companies valued at as much as $1.7 million, which he owned with his wife. The sale saved the couple at least $250,000 in losses based on what the stock was worth at the close of trading on March 19, 2020, The Wall Street Journal reported at the time
Mr. Burr couldn’t immediately be reached for comment. He has previously said that he made the trades based on news reports out of Asia rather than any inside information he had received. Separately, the Justice Department in January said that it wouldn’t pursue charges against Mr. Burr after ending its investigation of stock trades.
Mr. Fauth, who is chairman of the National Mediation Board, sold stock in his wife’s account in February 2020 immediately after speaking to Mr. Burr by phone, a SEC court filing says.
The SEC hasn’t yet taken Mr. Burr’s testimony, according to Joseph Warin, an attorney for Mr. Fauth. Mr. Warin, of Gibson, Dunn & Crutcher LLP, criticized the SEC’s request for his client to provide oral testimony.
“I would ask the court to inquire of the SEC why they haven’t gone to the first person where they say the issue arose from?” Mr. Warin said at Friday’s hearing. “Senator Burr hasn’t been questioned. And they seem completely fixated on taking our client’s testimony, and yet Mr. Burr has not been questioned and we’re coming on 18 months.
Judge Carter said he wouldn’t “attempt to micromanage the way the SEC prioritizes its investigation, or who it wishes to hear from first.”
Mr. Warin said Friday that he offered to have Mr. Fauth answer the SEC’s written questions, including any follow-ups. That should have been acceptable, Mr. Warin said. “It’s not that we were trying to keep anything from the SEC,” he said.
Reached by telephone after the hearing, Mr. Fauth declined to comment.
Mr. Fauth’s lawyers were told to provide the court by Wednesday with feedback from his physicians on whether he can safely testify during short sessions. Judge Carter suggested Mr. Fauth could appear every other day for 30 minutes at a time.
Nancy Brown, an attorney for the SEC, said the agency would agree with that approach.