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NPR first broke news of a secret recording in which Republican Sen. Richard Burr privately warned well-connected constituents about how bad the coronavirus crisis would become. Then ProPublica reported the senator dumped up to $1.7 million in stocks while telling the country it was well-positioned to withstand a pandemic. NPR can now report the Justice Department is looking into Senator Burr's statements around that time. Other media outlets have also reported the FBI has reached out to Burr to assess whether he had made stock sales based on inside information. NPR's Tim Mak reports on how this investigation may unfold.
TIM MAK, BYLINE: Any insider trading investigation hinges on whether a person made stock transactions based on nonpublic and material information. Doug Davison is a former Securities and Exchange Commission enforcement lawyer.
DOUG DAVISON: So not only was it nonpublic, but was it specific? Was it something that you and I, if we were shareholders of that company, would have reasonably expected to be considered significant at the time?
MAK: Sen. Burr's stock transactions - thirty-three on a single day; February 13 - present a unique challenge for investigators. Firstly, as chair of the Senate Intelligence Committee, the senator may have been privy to classified information, which complicates an investigation. Secondly, as a senator, Burr may be able to cite the Speech or Debate Clause of the Constitution, which gives lawmakers protections related to their official duties. Katie Goldstein, who used to lead investigations in the U.S. Attorney's Office for the Southern District of New York, explains.
KATIE GOLDSTEIN: It's a provision in the Constitution that is designed to give members of Congress freedom to debate, deliberate, to speak without fear of intimidation or threats from the executive branch.
MAK: She says it could be used by a lawmaker as a shield against providing certain types of information to investigators. Thirdly, insider trading investigations typically center around a single company and specific information. The information Burr received may have been about general economic concerns and his sell-off involved a broad unloading of stocks across numerous sectors. Joon Kim, the former acting U.S. attorney for the Southern District of New York, said that's a hurdle for investigators.
JOON KIM: It's not prohibitive in terms of making a case, but it certainly is harder when it is generalized information like that.
MAK: Goldstein explains ways investigators could handle issues like classified information or the Speech or Debate Clause.
GOLDSTEIN: An email that someone sends to someone else or a text message or a phone call that someone has with a third party, like their broker or a friend or anyone else, that information, with court order or by finding the right person to interview, the government can get their hands on.
MAK: Burr has previously said he made all of his trading decisions based on public information he learned from watching CNBC. Burr's lawyer, Alice Fisher, emphasized this in a statement saying, quote, "the law is clear that any American, including a senator, may participate in the stock market based on public information, as Sen. Burr did." She added that, quote, "Sen. Burr welcomes a thorough review of the facts in this matter, which will establish that his actions were appropriate." Burr has also asked for the Senate Ethics Committee to investigate his conduct. That secretive committee did not respond to an NPR inquiry. Both the Securities and Exchange Commission and the Justice Department declined to comment.
Tim Mak, NPR News, Washington.
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