What A Coincidence! Same Day Senator Burr Dumped His Stock, So Did His Brother-in-Law!

from the what-an-amazing-stroke-of-luck! dept

Senator Richard Burr's potential insider trading issues, for which he's being investigated, may have gotten quite a bit worse this week. A new report notes that on the same day Burr sold off a "significant percentage" of his stock holdings (while also telling the public not to worry about COVID-19), it turns out his brother-in-law just coincidentally decided to dump a bunch of stock too. Amazing!

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.

Could this actually be a coincidence? Sure. Maybe. But the timing (the very same day...) does seem notable. As the ProPublica report notes, Fauth "is not a frequent stock trader." Burr insists that his sales were based on public information, though it's difficult to see how he could simply ignore the classified briefings he got concerning the rising pandemic issues, and base decisions entirely on public information. Indeed, this is why government officials should be required to hand off any equities like this to a blind trust where they have no visibility into how it's traded.

Even if this is all legal (which is not certain either way yet...), it again reinforces the belief that the powerful live by different rules and are able to game the system for personal advantage, even as they're supposed to be serving the public interest.

Filed Under: gerald fauth, insider trading, public interest, richard burr, soft corruption, trust


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  • identicon
    Anonymous Coward, 8 May 2020 @ 1:50pm

    Insider?

    How is this insider trading? Surely anyone who invests and was paying attention could see that drop coming. Late March was well into the pandemic and the market was already reacting to it beforehand. It was pretty obvious that travel-related stocks were going to drop precipitously and that a drop like that has a ripple effect across the whole market. Everybody sold out, that's why the market as a whole dropped. Only those not paying attention got stuck holding.

    Politicians are scum, it's in their genes. But there's really no chance anything will come of all this feigned indignity at people selling stock before it loses a ton of value.

    reply to this | link to this | view in chronology ]

    • icon
      Mike Masnick (profile), 8 May 2020 @ 1:58pm

      Re: Insider?

      If he's tradeing based on information received in a classified briefing, while at the same time publicly touting that everything is fine and there's nothing to worry about... uh, yeah, dude, that's the definition of insider trading.

      It's easy to forget now how many people believed this wasn't going to hit the US hard at the time of these sales in early February. Lots of people didn't believe it was serious until March. And Burr's public statements contributed to that.

      reply to this | link to this | view in chronology ]

      • This comment has been flagged by the community. Click here to show it
        identicon
        Anonymous Coward, 8 May 2020 @ 2:36pm

        Re: Re: Insider?

        Traders react violently to the slightest hint that something may go right or wrong. Today, for example, saw a market rally based on a report of the job market being trash. It makes little sense that a bad report would cause a bullish reaction but a single report saying "this might be the bottom" is all it takes.

        Airlines and other modes of travel were publicly shutting down flights and introducing travel restrictions. That's more than enough to tell an investor that travel (and oil, agents, etc) are most likely going to be hit hard and it's time to pull out. Investors also know that a big hit to oil and airlines will depress the entire market. Enough people saw this coming that their activities tanked the entire market.

        It took zero insider info for any of that to happen.

        Maybe Burr & Co. did have classified info say something bad was coming. What I'm saying is that that info was of questionable value when even those without those reports could see it coming (if they were paying attention). I think it's going to be hard to argue that, sleazebags they may be, Burr and his son-in-law did anything provably wrong. Unfortunately.

        reply to this | link to this | view in chronology ]

      • identicon
        David, 9 May 2020 @ 12:35pm

        Re: Re: Insider?

        I think you all are overlooking something when focusing on Burr's insider trading. The insider trading is not the largest problem here.

        The reason Burr is receiving classified briefings is so that he can prepare the country faster for movements where speed over other nations is of essence.

        Not so that he can prepare himself faster. He is in that briefing because of responsibilities he has taken in the course of his job paid by the taxpayers.

        In order to secure himself and his tribe a few million dollars of winnings, he deliberately pulled the wool over the public's perception of the oncoming danger. The members of such committees using their privilege not for the good of the country but rather for their own profit to the immense detriment of the country: that is the problem.

        People like Burr are directly responsible for ten thousands of unnecessary deaths: the death rate of U.S. citizens is more than three times that of German citizens in spite of the U.S. intelligence being better (but ignored by the Trump government) and either working from the same information.

        It's just that politicians in Germany are using that information for averting damage from their constituents rather than stuffing their pockets with money and not being fazed by the prospects of ten thousands that are going to die in consequence of not receiving timely information and warning.

        In short: the problem is not just that they are stealing money from their constituents. The problem is that they are fine with them dying as a byproduct of their enrichment.

        Even for the greatest fans of capitalism, that should be crossing some red line.

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 11 May 2020 @ 8:12am

          Re: Re: Re: Insider?

          Even for the greatest fans of capitalism, that should be crossing some red line.

          Let me reintroduce you to the scale of capitalism:

          1. Socialism.
          2. Capitalism with major social programs and regulations to prevent abuse of the public (Every other major modern nation with a universal healthcare system.)
          3. Capitalism with minimal regulations to ensure the safety of the public. (What the US used to be decades ago.)
          4. Cut-throat Capitalism where anything goes as long as you pay off the right people in government. (What the US is today.)

          You seem to think that the US is still at number 3, let me assure you currently the US is a hellhole at number 4. The whole reason why the US will have a second (or even third) spike of infections is because of idiots that "wanna get my hair done!" Or scream "my frreedomz!" being goaded by the very wealthy who are not currently able to exploit them in the stock market due to the lockdown. Heck, not only that, but unlike every other modern nation dealing with this crisis, the US paid out trillions in free money to massive multinational corporations, some which don't even pay US taxes, and then told their own citizens that they would be helped out over a senator's dead body. People are starving, have lost their jobs, are unable to get unemployment benefits, and are essentially being forced back to work well before they should be, all because the wealthy want more money.

          If anyone in the international community has any lick of sense about them, or compassion for their own citizens, they will immediately ban travel to / from the US, as well as all imports from the US. Until such a time that the US population and their products can be safely assumed to be uninfected despite the US's massive greed and unwillingness to take proper care of it's citizenry.

          reply to this | link to this | view in chronology ]

          • identicon
            Anonymous Coward, 11 May 2020 @ 11:26am

            Re: Re: Re: Re: Insider?

            Wait til you see the corporations receiving billions in tax handouts that have no US presence whatsoever. And that aren't even legally obligated to pay a single dollar in US tax.

            Chinese "hospital" corporations that don't take US patients, or sell anything or service to the US etc.

            But they DO offer kickbacks to the president and enough senators/congressmen to keep the cash flowing.

            reply to this | link to this | view in chronology ]

    • identicon
      Damien, 8 May 2020 @ 2:11pm

      Re: Insider?

      How, pray tell, is a high level senator receiving classified warnings, but saying in public that everything is fine, not the definition of an insider? And no, everyone didn't know that travel stocks were going to tank.

      reply to this | link to this | view in chronology ]

      • This comment has been flagged by the community. Click here to show it
        identicon
        Anonymous Coward, 8 May 2020 @ 2:29pm

        Re: Re: Insider?

        everyone didn't know that travel stocks were going to tank

        I have absolutely no insider connections and I "knew". Clearly I wasn't alone in that knowledge, either. How could travel not tank when even Trump was announcing travel restrictions the month before?

        The only way you didn't know that was coming is if you weren't paying any attention at all (or lack the critical thinking skills to make the connection).

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 8 May 2020 @ 3:32pm

          Re: Re: Re: Insider?

          The question is being asked, that is all, don't have a cow.
          Why are you so defensive anyways?

          reply to this | link to this | view in chronology ]

          • This comment has been flagged by the community. Click here to show it
            identicon
            Anonymous Coward, 8 May 2020 @ 4:02pm

            Re: Re: Re: Re: Insider?

            I'm not defensive about it. After all, I'm not the one under the microscope. But I really don't understand the outrage about this. Why is this even in the news?

            reply to this | link to this | view in chronology ]

            • icon
              That One Guy (profile), 8 May 2020 @ 6:03pm

              Re: Re: Re: Re: Re: Insider?

              A politician receiving government briefings on the subject, who in public is claiming that nothing is wrong and that there's no need to worry because the government is more prepared than ever to deal with a pandemic, while admitting in private that it was going to be seriously bad and dumping stock in companies likely to be hit?

              You can't think of any reason that might be newsworthy? Really?

              reply to this | link to this | view in chronology ]

              • identicon
                David, 9 May 2020 @ 2:07am

                Re: Re: Re: Re: Re: Re: Insider?

                A politician receiving government briefings on the subject, who in public is claiming that nothing is wrong and that there's no need to worry because the government is more prepared than ever to deal with a pandemic, while admitting in private that it was going to be seriously bad and dumping stock in companies likely to be hit?

                Well, seems like this government representative indeed was more prepared than ever to deal with a pandemic.

                And he managed to save millions off his constituents. Sic.

                reply to this | link to this | view in chronology ]

            • icon
              PaulT (profile), 8 May 2020 @ 11:00pm

              Re: Re: Re: Re: Re: Insider?

              "Why is this even in the news?"

              A government official was lying to the public while he, his colleagues and his family were profiting from those lies in private. Why wouldn't it be in the news?

              reply to this | link to this | view in chronology ]

            • identicon
              Anonymous Coward, 9 May 2020 @ 6:26am

              Re: Re: Re: Re: Re: Insider?

              I understand the defensiveness of those with things to hide, it is a normal response.

              Nothing to be afraid of when not under the microscope? Typical

              Why is anything in the news? Maybe because that is what people will watch and maybe they will also watch the ads, which are all that counts.

              I am a bit surprised at the lack of concern on your part regarding a paid representative of our federal government who has been involved in potential misconduct and/or criminal behavior.

              As a test of the bias within your opinion, replace the name of subject with that of someone who has characteristics you dislike.

              reply to this | link to this | view in chronology ]

              • identicon
                Anonymous Coward, 9 May 2020 @ 8:22am

                Re: Re: Re: Re: Re: Re: Insider?

                Your attempts at getting me to rise to your obvious bait are, well, obvious. The truth is that while I am a stock investor I am not a politician and I have no access to insider information that could affect my trading. I simply don't have a dog in this fight.

                I think there is no such thing as an honest politician. Every one of them, even those you or I might agree with, tailors their public persona to suit their perceived constituents while privately acting in their own interest. They're actors and most if not all of them should probably be in jail.

                Despite that, I still don't get how the material in this article is such a huge deal given there's nothing in those reports that could have made any significant difference. In hindsight it's clear that everything attentive investors thought was going to happen is exactly what happened. No more, no less. The report was either right in line with that or perhaps went further, which was not borne out in the markets. In this case I don't think "insiders" were privy to any data not already available to the public.

                There are plenty of other things I'm sure we can use to try and drag down various politicians, this one likely included. The present issue, I feel, is a tempest in a teapot. Put aside partisan politics; Stop advancing the right-wing narrative. Focus outrage where it belongs and maybe something can actually get done to improve things rather than dividing our attention across so many distractions that nothing ever gets done.

                reply to this | link to this | view in chronology ]

                • identicon
                  Anonymous Coward, 9 May 2020 @ 3:54pm

                  Re: Re: Re: Re: Re: Re: Re: Insider?

                  I was told that if you see something, say something. What is the problem with asking about the trades? You spend a lot of time typing in defense of not answering the question.

                  reply to this | link to this | view in chronology ]

                • icon
                  PaulT (profile), 10 May 2020 @ 1:29am

                  Re: Re: Re: Re: Re: Re: Re: Insider?

                  "there's nothing in those reports that could have made any significant difference"

                  Then, why lie to the public about them?

                  " In hindsight it's clear that everything attentive investors thought was going to happen is exactly what happened"

                  Key point - attentive. They're not the ones who would panic if bad news were made clear, which are the investors he was trying to keep in the dark until he and his had profited. That's the problem.

                  "Focus outrage where it belongs"

                  Such as on public servants who are lying to the public for personal financial gain, including downplaying events that cause their constituents physical risk? Despite your pessimism, politicians who do not do such things do exist, and you're be better off getting rid of the ones who do rather than shrugging your shoulders and accept that they're stealing from you.

                  reply to this | link to this | view in chronology ]

    • identicon
      Carl A. Helsing, 8 May 2020 @ 5:54pm

      Re: Insider?

      An "insider " behind the insider--?

      reply to this | link to this | view in chronology ]

    • icon
      PaulT (profile), 8 May 2020 @ 11:08pm

      Re: Insider?

      There's a difference between "well, this is likely to happen" and "I've been informed in a classified meeting that this is 100% going to happen". There's also a difference between privately divesting stocks and divesting stocks while using your position as a public official to tell everyone else they don't need to divest theirs.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 9 May 2020 @ 8:30am

        Re: Re: Insider?

        There's a difference between "well, this is likely to happen" and "I've been informed in a classified meeting that this is 100% going to happen".

        Agreed. But there's no way that report or any other could say with 100% certainty that anything was going to happen in a market controlled by the public. The investor reaction to whatever in that report could have ended up being the polar opposite of their expectations. Take the market reaction to the horrible report on jobs and the economy, for example. The report was bleak but the market climbed markedly in stark contrast based on hopes that "we've hit bottom, it can only go up from here". The market is fickle and investors are largely unpredictable. Not even a government classified report is any guarantee of what will happen.

        There's also a difference between privately divesting stocks and divesting stocks while using your position as a public official to tell everyone else they don't need to divest theirs.

        This is the only part of this whole story that seems properly sleazy to me. Burr, out of one side of his face, tries to reassure the public that nothing is wrong while, out the other side, protects his own interests by pulling his money out of the market. I don't see that this is different from any other political lie though. This is modus operandi for the American federal government. Anybody who manages their portfolio by the word of politicians should be prepared for a washout.

        reply to this | link to this | view in chronology ]

        • identicon
          Rocky, 9 May 2020 @ 2:57pm

          Re: Re: Re: Insider?

          Seems to me that you don't give a shit about how government officials conduct themselves.

          If you don't speak up against corruption and injustice, you give it your tacit approval which definitely makes you part of the problem.

          reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 9 May 2020 @ 6:15pm

          Re: Re: Re: Insider?

          Cool - does that mean that anyone can do the same thing and expect to not be questioned, investigated, etc?

          reply to this | link to this | view in chronology ]

        • icon
          Scary Devil Monastery (profile), 11 May 2020 @ 5:38am

          Re: Re: Re: Insider?

          "I don't see that this is different from any other political lie though."

          Possibly no different than any other political lie, except that this one happens to violate the law.

          Generally speaking if you hold political office where you stand the chance of obtaining information not available to the general public which could impact your business decisions then you should either divest yourself of those business interests or abstain from holding that office.

          If you do neither then you should be hung, drawn and quartered when such conflict occurs.

          It's already demonstrably true that he has acted on insider information. Naturally he'll be able to play the "innocent until proven guilty" card - and rightly so, since no one can read his mind post facto.

          His career, however, should be shot over this and the lesson learned that anyone who holds business interests must be exempt from also holding public office where he is likely to obtain information affecting those interests.

          reply to this | link to this | view in chronology ]

  • icon
    DB (profile), 8 May 2020 @ 2:22pm

    Trading on "public information" isn't the criteria, nor should it be.

    Once you know the inside information it's easy to find public information that supports a trade. The key question was whether the inside information was communicated and triggered the trade.

    reply to this | link to this | view in chronology ]

  • icon
    That One Guy (profile), 8 May 2020 @ 3:07pm

    'Everything is fine!' said the captain putting on a life-vest...

    Truly, you'd be hard pressed to find a more amazing coincidence than not one but two people in a family dumping stocks in companies about to take a beating while one of them is assuring the public that everything is going to be fine, nothing to worry about.

    With incredible luck like that though they really should check out the lotto, I'm sure they'd have no problem winning several times in a row and raking in far more than any piddling little stocks could ever get them.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 8 May 2020 @ 5:39pm

    Miss Piggy: "What an unbelievable coincidence!"

    reply to this | link to this | view in chronology ]

  • identicon
    dickeyrat, 9 May 2020 @ 6:06am

    No, don't sweat it, it's all good! It's all perfectly OK! See, this is now Blump's Amerika, and Sen. Burr is a loyal member of The Party. That means he gets away with whatever Blump and his worshipers say is cool. Of course, if he had been a Democrat, or an otherwise non-tool of The Party, he'd probably be looking at doing some time. But just look at the case of Michael Flynn as an example. Flynn pled guilty; he knew he had been nailed. But Flynn is another loyal operative of The Party, so he will not be further prosecuted. Stick with The Party, and you've got it made. (Seems I read something decades ago about a similar place and its system, a place then called the Soviet Union.)

    reply to this | link to this | view in chronology ]

  • icon
    jimb (profile), 9 May 2020 @ 9:02am

    no coincidence

    "Even if this is all legal (which is not certain either way yet...), it again reinforces the belief that the powerful live by different rules and are able to game the system for personal advantage, even as they're supposed to be serving the public interest."

    This isn't a "belief". This is a fact. Any rational analysis of "justice system" data will show this to be evident in the data.

    reply to this | link to this | view in chronology ]


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