“I mean, it’s insane,” he said of the insider-trading legislation for members of Congress.
According to public disclosures, the chairman of the Senate Intelligence Committee sold 33 stocks held by him and his spouse, estimated at between $628,033 and $1.72 million, in some of the industries hit hardest by the global pandemic. Those disclosures, first reported by ProPublica and the Center for Responsive Politics, were coupled with a recording obtained by NPR from a private luncheon last month in which Burr compared the potential impact of covid-19 to the deadly 1918 flu pandemic. Burr denied the NPR report, saying the outlet “knowingly and irresponsibly misrepresented” his speech at the luncheon.
“Senator Burr filed a financial disclosure form for personal transactions made several weeks before the U.S. and financial markets showed signs of volatility due to the growing coronavirus outbreak,” Burr’s office said in a statement to The Washington Post’s Michelle Ye Hee Lee and John Wagner.
On Thursday night, there were widespread calls for Burr to resign, ranging from Fox News host Tucker Carlson to Rep. Alexandria Ocasio-Cortez (D-N.Y.). Those calls were also directed toward Sen. Kelly Loeffler (R-Ga.) after the Daily Beast reported that she sold off a large amount of stock in the time before the novel coronavirus crushed the market. (Loeffler disputed the report, tweeting that the claim was a “ridiculous & baseless attack.”)
Many of Burr’s critics were quick to reference the Stock Act, with #InsiderTrading trending into early Friday. Among them was Minnesota Gov. Tim Walz (D), who helped champion the bill during his time in the House of Representatives.
“I authored the Stock Act in Congress to call out this exact type of unconscionable behavior,” Walz tweeted. “I take comfort in knowing it’s being put to good use.”
During his State of the Union address in 2012, Obama urged Congress to pass the Stock Act, stressing that its members and staff had to play by the same rules as everyday Americans and not use any inside knowledge for personal profit.
Burr rejected the idea that specific legislation was needed for Congress, pointing to existing federal laws from the Securities and Exchange Commission to prevent insider trading.
“The laws that are currently on the books apply to all members of Congress and all staff, not limited staff,” he said before the vote.
But when it comes to Congress and the stock market, there has been skepticism about how strongly the laws are enforced. In a 2004 paper published in the Journal of Financial and Quantitative Analysis, researchers found that senators who made stock trades outperformed the market by an average margin of 12 percent. A 2010 Wall Street Journal investigation later found that congressional staffers had stock in companies benefiting from legislation that the staffers were supporting.
It got the attention of Luigi Zingales, a professor at the University of Chicago Booth School of Business. In 2011, Zingales wrote for CNN that the senators’ savvy market trading meant they “either are better than hedge-fund managers, or that they benefit from privileged information.”
Burr’s position came up again during his 2016 Senate campaign. In a debate leading up to the election, Democrat Deborah Ross called out Burr for his “brave vote” in opposing the legislation. Again, Burr didn’t back down.
“It is illegal, in law, even for Congress, to trade on insider trading,” Burr said in response to Ross, according to PolitiFact. “That’s the reason I opposed the Stock Act. North Carolinians did not send me to Washington to duplicate existing law, and that’s in fact what the Stock Act did.”
On social media, Norman J. Ornstein, a resident scholar at the American Enterprise Institute, pointed out how Burr’s reported stock dump before the outbreak was a situation that the Stock Act was supposed to prevent. Others, such as former labor secretary Robert B. Reich, were left baffled over the public disclosures.
“This kind of self-serving behavior from a sitting senator at a time of unprecedented crisis is unacceptable,” tweeted Reich, a professor of public policy at the University of California at Berkeley.