On the Same Day Sen. Richard Burr Dumped Stock, So Did His Brother-in-Law. Then the Market Crashed.

The brother-in-law, a Trump appointee, sold between $97,000 and $280,000 worth of stock. Burr is under federal investigation over whether he traded on non-public information gathered through his work in the Senate.
Chairman Richard Burr, R-NC, gives opening remarks at a Senate Intelligence Committee hearing for a nomination for Rep. John Ratcliffe, R-TX, on Capitol Hill in Washington,DC on May 5, 2020. - The panel is considerin... Chairman Richard Burr, R-NC, gives opening remarks at a Senate Intelligence Committee hearing for a nomination for Rep. John Ratcliffe, R-TX, on Capitol Hill in Washington,DC on May 5, 2020. - The panel is considering Ratcliffes nomination for Director of National Intelligence. (Photo by Andrew Harnik / POOL / AFP) (Photo by ANDREW HARNIK/POOL/AFP via Getty Images) MORE LESS
Start your day with TPM.
Sign up for the Morning Memo newsletter

This story first appeared at ProPublica. ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.

Sen. Richard Burr was not the only member of his family to sell off a significant portion of his stock holdings in February, ahead of the market crash spurred by coronavirus fears. On the same day Burr sold, his brother-in-law also dumped tens of thousands of dollars worth of shares. The market fell by more than 30% in the subsequent month.

Burr’s brother-in-law, Gerald Fauth, who has a post on the National Mediation Board, sold between $97,000 and $280,000 worth of shares in six companies — including several that have been hit particularly hard in the market swoon and economic downturn.

A person who picked up Fauth’s phone on Wednesday hung up when asked if Fauth and Burr had discussed the sales in advance.

In 2017, President Donald Trump appointed Fauth to the three-person board of the National Mediation Board, a federal agency that facilitates labor-management relations within the nation’s railroad and airline industries. He was previously a lobbyist and president of his own transportation economic consulting firm, G.W. Fauth & Associates.

Burr came under scrutiny after ProPublica reported that he sold off a significant percentage of his stocks shortly before the market tanked, unloading between $628,000 and $1.72 million of his holdings on Feb. 13 in 33 separate transactions. As chairman of the Senate Intelligence Committee and a member of the health committee, Burr had access to the government’s most highly classified information about threats to America’s security and public health concerns.

Before his sell-off, Burr had assured the public that the federal government was well-prepared to handle the virus. In a Feb. 7 op-ed that he co-authored with another senator, he said “the United States today is better prepared than ever before to face emerging public health threats, like the coronavirus.”

That month however, according to a recording obtained by NPR, Burr had given a VIP group at an exclusive social club a much more dire preview of the economic impact of the the coronavirus, warning it could curtail business travel, cause schools to be closed and result in the military mobilizing to compensate for overwhelmed hospitals.

The timing of Burr’s stock sales drew widespread outrage, allegations of insider trading, calls for his resignation and an FBI investigation.

Burr defended his actions, saying he relied solely on public information, including CNBC reports, to inform his trades and did not rely on information he obtained as a senator.

Fauth avoided between $37,000 and $118,000 in losses by selling off when he did, considering how steeply the companies’ shares fell in recent weeks, according to an analysis by Luke Brindle-Khym, a partner and general counsel of Manhattan-based investigative firm QRI. Brindle-Khym obtained Fauth’s financial disclosure from the Office of Government Ethics and shared it with ProPublica. Government forms only require that the value of stock trades be disclosed in ranges. After the February sales, the total value of Fauth’s individual stock holdings appears to be between $680,000 and $2 million.

Alice Fisher, Burr’s attorney, told ProPublica that “Sen. Burr participated in the stock market based on public information and he did not coordinate his decision to trade on Feb. 13 with Mr. Fauth.”

She did not respond to a question about whether Burr discussed anything he learned as a senator with Fauth or any other relatives.

A review of Fauth’s financial disclosure forms since 2017 show that he is not a frequent stock trader, but that he also had a major day of sales in August 2019.

On Feb. 13, Fauth or his spouse sold between $15,001 and $50,000 of Altria, the tobacco company; between $50,001 and $100,000 of snack food maker Mondelez International; and between $1,001 and $15,000 of home furnishings retailer Williams-Sonoma. He also sold stakes in several oil companies, which have been hit particularly hard, including between $15,001 and $50,000 of Chevron; between $1,001 and $15,000 of BP and between $15,001 and $50,000 of Royal Dutch Shell.

The finances of the Burrs and Fauths have intersected before. Federal Election Commission records show that Burr’s leadership PAC, Next Century Fund, has paid $120,348 since 2002 to his sister-in-law, Mary Fauth, Gerald’s wife, who serves as treasurer. The PAC has also paid $104,850 in rent and utilities over the same period to 116 S. Royal St. Partners, in which Gerald Fauth is a partner.

Do you have access to information about stock trading by Trump administration officials or members of Congress that should be public? Email robert.faturechi@propublic.org or reach him on Signal/WhatsApp at 213-271-7217. Here’s how to send tips and documents to ProPublica securely.

Update, May 6, 2020: This story was updated with new comment from Sen. Richard Burr’s attorney.

Filed under:

 

Latest News

Notable Replies

  1. Pardon me, are you Richard Burr, sir?

    That depends. Who’s asking?

    Oh, sure. Sir, I’m from the SEC.

    Oh, you got the wrong guy, I’m definitely Alexander Hamilton.

  2. Ooopsie! That conversation was just between family. I didn’t know that was illegal!

  3. Family values, a conservative principle.
    What could be wrong with that?

  4. Lock 'em up. Lock them all up.

  5. No insider trading to see here…

Continue the discussion at forums.talkingpointsmemo.com

78 more replies

Participants

Avatar for discobot Avatar for paulw Avatar for fgs Avatar for sysprog Avatar for imkmu3 Avatar for wordtoyamamma Avatar for eggrollian Avatar for tigersharktoo Avatar for DuckmanGR Avatar for lastroth Avatar for darcy Avatar for pine Avatar for thunderclapnewman Avatar for jonney_5 Avatar for castor_troy Avatar for corncaucus2008 Avatar for hahagoodman Avatar for maximus Avatar for drtv Avatar for carolson Avatar for bcgister Avatar for greenman66 Avatar for txlawyer Avatar for laparque

Continue Discussion
Masthead Masthead
Founder & Editor-in-Chief:
Executive Editor:
Managing Editor:
Deputy Editor:
Editor at Large:
General Counsel:
Publisher:
Head of Product:
Director of Technology:
Associate Publisher:
Front End Developer:
Senior Designer: