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SEC Closes Insider-Trading Investigation Into Ex-Sen. Richard Burr's Stock Sales -- WSJ

The Wall Street Journal · 01/06/2023 11:22

By Dave Michaels

WASHINGTON -- The Securities and Exchange Commission is no longer investigating trading by former Sen. Richard Burr, whose stock sales in February 2020 raised concerns he had misused information he received as a lawmaker about the coronavirus pandemic's potential economic impact.

The SEC this week told Mr. Burr, a North Carolina Republican who retired from the Senate at the start of the year, that it had closed the investigation and wouldn't take enforcement action against him, according to a statement released by Latham & Watkins LLP, the law firm that represented him.

"I am glad to have this matter in the rearview mirror as I begin my retirement from the Senate following nearly three decades of public service," Mr. Burr said. An SEC spokesman didn't immediately respond to a request seeking comment.

Mr. Burr, who sat on two Senate committees that received detailed briefings on the pandemic, sold shares of companies valued at almost $1.7 million. The former senator sold every stock he owned except one that had been held in an individual retirement account he co-owned with his wife. The sale saved the couple at least $250,000 in losses based on what the shares were worth at the close of trading March 19, 2020, The Wall Street Journal reported at the time.

The SEC examined whether Mr. Burr's sales violated laws including the Stock Act, which prohibits lawmakers from using nonpublic information for personal benefit. The agency's lawyers also probed whether Mr. Burr tipped his brother-in-law, Gerald Fauth, to what the senator learned about the pandemic's possible impact. Mr. Fauth is a member of the National Mediation Board, which deals with labor-management disputes within the railroad and airline industries.

Mr. Fauth sold stock in his wife's account in February 2020 three minutes after speaking to Mr. Burr by phone, the SEC said in court filings. The SEC also informed Mr. Fauth that it wouldn't sue him over his trading, according to his attorney, Joseph Warin of Gibson, Dunn & Crutcher LLP.

"We are thrilled that the SEC and the DOJ appropriately closed their investigations without any findings of insider trading," Mr. Warin said. "Mr. Fauth looks forward to continuing his public service and leadership in the transportation industry."

The SEC and Mr. Fauth clashed over his testimony, which he initially sought to avoid giving, citing health concerns, according to the regulator. After the SEC went to a Manhattan federal court to ask a judge to compel his cooperation, Mr. Fauth eventually testified, according to court records.

The Justice Department also investigated Mr. Burr's trading, but closed its probe in January 2021. Prosecutors generally face a higher burden of proof in court than regulators, who bring civil claims over alleged trading violations.

Write to Dave Michaels at dave.michaels@wsj.com

(END) Dow Jones Newswires

January 06, 2023 11:22 ET (16:22 GMT)

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