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GOP Senator Told Brother-in-Law to Dump Stocks Ahead of 2020 Market Crash

GOP Senator Told Brother-in-Law to Dump Stocks Ahead of 2020 Market Crash

Richard Burr investigation

ProPublica has been following a case of alleged insider trading involving Republican Senator Richard Burr of North Carolina since last spring when they revealed Burr and his brother-in-law each dumped stocks within minutes of speaking on the phone regarding the impending market crash in February. Burr is said to have sold $1.6 million worth of stocks according to filings from the Securities and Exchange Commission (SEC).

Burr’s brother-in-law, Gerald Fauth, a Trump appointee who still has a post on the National Mediation Board, sold between $97,000 and $280,000 worth of shares in six companies, including several that had been hit particularly hard in the market in the wake of uncertainty surrounding the still relatively new Coronavirus pandemic. Donald Trump appointed Fauth to the three-person board, a federal agency that facilitates labor-management relations within the nation’s railroad and airline industries. President Joe Biden reappointed him to the board.

Richard Burr investigation
[Photo by Andrew Harnik-Pool/Getty Images]
After Burr and Fauth spoke for all of 50 seconds, Fauth then called his broker. Burr, according to the SEC, had “material nonpublic information” regarding the incoming economic impact of coronavirus. The week after the trades, the market began its crash, falling by more than 30% in the subsequent month.

In the filings, the SEC also revealed that there is an ongoing insider trading investigation into both Burr and Fauth’s trades. The revelations come as part of an effort by the SEC to force Fauth to comply with a subpoena that the agency said he has stonewalled for more than a year, and which was filed not long after ProPublica’s story.

According to the SEC, Fauth has cited a medical condition for why he cannot comply with the subpoena, even as he has been healthy enough to continue his duties at the National Mediation Board. In its filings, the SEC accuses Fauth of engaging in “a relentless battle” to dodge the subpoena.

Read ProPublica’s full report here.

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