Burr brother-in-law ordered to testify in insider trading probe
The brother-in-law of Sen. Richard Burr (R-N.C.) has been ordered to testify in an insider trading probe that is investigating stock sales he and the senator made before the stock market plummeted as COVID-19 was starting to spread in the U.S.
The Securities and Exchange Commission (SEC) announced in a statement on Wednesday that U.S. District Judge Andrew Carter Jr. granted the agency the authority to enforce a subpoena against Gerald Fauth, Burr’s brother-in-law, to compel him to testify in the probe.
He was initially issued an investigative subpoena in May of last year requesting his testimony but failed to comply, citing health concerns.
According to CNN, Fauth pointed to a serious medical condition that he said should have barred him from being questioned under oath because of the stress it would cause.
The SEC will now be tasked with providing documents and topics one week before Fauth answers questions under oath from a remote location, according to CNN. The testimony will reportedly last 2.5 hours and have unlimited breaks.
The Hill reached out to Burr for comment.
The SEC revealed in a court filing last month that it was investigating Burr’s sale of almost all his stock holdings on Feb. 13, 2020, after he sat in on classified briefings about the spread of COVID-19.
The sale amounted to more than $1.6 million.
The SEC also said it was investigating Fauth, who made similar sales on the same day after Burr called him on the phone minutes earlier.
Attorneys for both men have denied any wrongdoing, CNN reported.
“Among other things, the Commission is investigating whether [Burr] sold stocks on the basis of material nonpublic information,” the SEC said in the October filing in the District Court for the Southern District of New York, first reported by ProPublica.
The agency said it “appears” that the senator had access to nonpublic information as chairman of the Senate Intelligence Committee, through his seat on the Senate Health, Education, Labor and Pensions Committee, and from his former staffers who played a role in efforts to combat the pandemic when he decided to sell the majority of his stock holdings.
The SEC said the senator reached out to his stockbroker in the morning of Feb. 13 with instructions to sell more than $1.6 million in holdings in his and his wife’s joint individual retirement account (IRA). Fauth then placed a call to his sister, Burr’s wife, two hours later, which was followed by a short call to Fauth from the senator, according to the SEC.
Three minutes after the second phone call, Fauth allegedly contacted his stockbroker with instructions to sell several holdings from his wife’s IRA.
Investors are banned from buying or selling securities on the basis of nonpublic information until it becomes public, according to federal law, since that information would likely affect stock prices. Trading on the basis of nonpublic information is referred to as “insider trading.”
The Stop Trading on Congressional Knowledge Act prohibits members of Congress from enriching themselves by making financial trades based on nonpublic information.
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