Los Angeles firm sues US senator alleging insider training

A California law firm sued U.S. Sen. Richard Burr, accusing the North Carolina Republican of relying on inside knowledge about the coronavirus outbreak to make stock trades.

"This lawsuit is brought to address acts of securities fraud committed by defendant Richard M. Burr, a United States Senator, who has acted as a scofflaw in a time of national crisis," opens the complaint from investor Alan D. Jacobson, a Los Angeles resident. Jacobson v. Burr, 1:20-cv-00799 (D.C., filed March 23, 2020).

The complaint was filed by Eric M. George and Thomas P. O'Brien of Browne George Ross LLP in Los Angeles.

"What the senator did in this time of crisis -- abusing his official position for personal financial reasons - -is enough to turn the stomach of even the most hardened cynic," George said in an email Monday night. "This had nothing to do with political affiliation but is an effort to hold this scofflaw to account."

Burr is one of several federal lawmakers accused of making trades using inside knowledge following early private briefings about the worsening COVID-19 outbreak. The complaint identified 33 trades Burr and his wife reported they made on Feb. 13 "exploiting information unavailable to the public." Jacobson was injured because he owned shares of Wyndham Hotels & Resorts Inc., one of the companies whose shares Burr sold, the complaint alleged.

Burr issued a statement Friday saying he "relied only on public news reports to guide my decisions" about the trades. He has also asked the Senate Ethics Committee to conduct a review.

The complaint goes on to detail private briefings the plaintiff says Burr received in January through the U.S. Senate Committee on Health, Education, Labor and Pensions, of which Burr is a member. Burr also chairs the powerful Senate Intelligence Committee. "On Feb. 7, 2020, Senator Burr assured the public that 'the United States today is better prepared than ever before to face emerging public health threats like the coronavirus," the complaint read.

Burr disclosed the trades on Feb. 27, along with information placing their value at between $628,000 and $1.7 million. The complaint goes on to cite a two-year-old story in Roll Call that estimated his net worth at $1.7 million, meaning "Burr suddenly decided to liquidate nearly every asset he owned." The sales were by far Burr's largest transaction in the past 14 months and included up to $150,000 in Wyndham shares.

The company's shares have since lost two-thirds of their value, while the Dow Jones Industrial Average has lost about a third of its value.

The complaint seeks compensatory damages and attorney fees. It also states, "Plaintiff's ability to obtain relief is unimpaired by the fact that Senator Burr is a member of the U.S. Senate."