Is Senator Burr Guilty of Insider Trading under the STOCK Act?

Abstract

The SEC and U.S. Justice Department are investigating suspicious stock trades made by U.S. Senator Richard Burr in February 2020, which might have been based in part upon confidential information about the Coronavirus pandemic disclosed at closed-door congressional hearings, which if true, might violate the Stop Trading on Congressional Knowledge, or STOCK Act. The investigations may turn on whether Senator Burr’s trades were based upon confidential government information, or publicly available news reports.The outcome of the investigation into Senator Burr’s trading may depend on the nature and timing of the confidential briefings and public disclosures about COVID-19, as compared to the nature and timing of Senator Burr’s trades. Evidence that Senator Burr relied upon both public and non-public information to make his stock trading decisions could muddy the waters of a potential criminal proceeding, with its attendant legal standard of proof beyond a reasonable doubt. But the Securities and Exchange Commission would encounter only a civil burden of proof, which could be more readily proven. And, in any event, Senator Burr faces a Senate ethics investigation, and bipartisan criticism for the optics of publicly urging calm while privately dumping large quantities of his stock portfolio.