WASHINGTON – A burgeoning insider trading investigation scrutinizing members of the U.S. Senate led the chairman of its Intelligence Committee, Sen. Richard Burr, to step down abruptly Thursday after FBI agents seized his cellphone seeking evidence related to stock sales he made before the coronavirus pandemic crashed global markets.
Senate Majority Leader Mitch McConnell, R-Ky., said in a statement that Burr, a North Carolina Republican, informed him Thursday morning of his decision to step aside as committee chairman “during the pendency of the investigation.” The two agreed, McConnell added, “that this decision would be in the best interests of the committee” and was to take effect Friday.
Also Thursday, aides to Sens. Dianne Feinstein, D-Calif., and Kelly Loeffler, R-Ga., acknowledged that the senators had been in contact with federal law enforcement. Feinstein had been questioned by FBI agents about stock sales, which she has said were done by her husband and without her knowledge, a spokesperson said. Loeffler’s office acknowledged she had turned over documents related to stock sales she says she did not actively participate in.
FBI agents, acting with approval from the “highest levels” of the Justice Department, served a search warrant for Burr’s cellphone to his lawyer, and then went to Burr’s Washington-area home to take possession of the device, according to people familiar with the matter, who, like others spoke on the condition of anonymity because the investigation is ongoing.
Investigators also obtained a search warrant to examine data in the senator’s cloud storage for his iPhone, people familiar with the case said. The Burr search warrants were first reported by the Los Angeles Times on Wednesday.
Burr’s decision to surrender his role as chairman acknowledges the awkward, ethically fraught dynamic that would have existed if he had continued to lead a committee with oversight responsibilities for an agency conducting a criminal investigation of his conduct, and comes as he has fallen out of favor with President Donald Trump and his allies over his handling of the committee’s sweeping, years-long investigation into Russia’s interference in the 2016 U.S. election.
Trump took aim at Burr a year ago, when the intelligence committee issued a subpoena to compel testimony from the president’s son, Donald Trump Jr. The move proved deeply frustrating for the president’s defenders as they sought to dismiss the bipartisan investigation as a politically motivated hit job. Burr also drew the disapproval of many Trump supporters over his cooperative, collegial relationship with Sen. Mark Warner of Virginia, the committee’s ranking Democrat. Trump has retweeted others’ criticism of Burr as recently as Monday.
Burr’s departure as Intelligence Committee chairman also has implications for the delicate balance of power between the government’s executive and legislative branches, suggesting that an investigation alone may be enough to remove a senior lawmaker from a key post. In the case of Sen. Robert Menendez, D-N.J., he did not step down from a ranking committee position until he after he was indicted on corruption charges in 2015 – a case that eventually fell apart.
A person familiar with the investigation of Burr and other senators said investigators are examining the timing of his trades and any communications concerning stock sales that he may have had with his brother and others. This person cautioned, however, that there are significant legal hurdles to bringing charges in such cases, particularly the Constitution’s “speech or debate” clause which covers many of the activities of members of Congress.
“It’s a very difficult case, that’s going to have significant challenges,” this person said, noting that the inquiries are complicated by the timing of certain trades, and who actually ordered them. “The most compelling case is against Burr, and the others appear to be very weak cases,” the person said.
Melanie Sloan, senior adviser to American Oversight, a government watchdog group, said the known pieces of the case “suggest that Burr was involved in insider trading. That said, the speech or debate clause makes it extremely unlikely that the Department of Justice will ever be able to bring a case against the senator.”
Sloan added that the debate surrounding Attorney General William Barr’s handling of politically sensitive cases in recent months will only fuel doubts about the Justice Department’s motives in Burr’s case.
“The lack of public confidence in the Department of Justice leaves everybody wondering why they are doing what they are doing and if there is some other motive,” she said.
Burr has denied wrongdoing and asked for the Senate Ethics Committee to review his financial dealings. Speaking briefly to reporters Thursday, he said he has been cooperating with federal investigators “from the beginning,” and urged everyone “to let this investigation play out.”
He said he stepped aside as chairman because the insider trading investigation “is a distraction to the hard work of the committee, and the members and I think that the security of the country is too important to have a distraction.”
Tom Mentzer, a spokesman for Feinstein, said Thursday that she was “asked some basic questions by law enforcement about her husband’s stock transactions.” The spokesman said Feinstein “was happy to voluntarily answer those questions to set the record straight and provided additional documents to show she had no involvement in her husband’s transactions. There have been no follow up actions on this issue.” She was questioned in April, aides said.
Disclosure records show Feinstein and her husband sold between $1.5 million to $6 million worth of stock between Jan. 31 and Feb. 18.
On Thursday, a spokeswoman for Loeffler said she has provided documents and information to the Justice Department, Securities and Exchange Commission, and Senate Ethics Committee “establishing that she and her husband acted entirely appropriately and observed both the letter and the spirit of the law. The documents and information demonstrated her and her husband’s lack of involvement in their managed accounts, as well the details of those accounts.”
Sen. James Inhofe, R-Okla., also has faced public scrutiny over his stock moves before the pandemic. His office did not respond to requests for comment Thursday.
The shake-up will force McConnell to reconfigure the Intelligence Committee’s Republican side. Aides to the majority leader declined to comment Thursday afternoon when asked whom he might install as chairman. Burr is expected to remain on the committee even though he will not be chairman.
If McConnell chooses to go by seniority, Sen. James Risch, R-Idaho, would be next in line to chair the committee, but he already leads the Senate Foreign Relations Committee. After Risch is Sen. Marco Rubio, R-Fla., a national security hawk who had been widely expected to take over the committee once Burr retires. But Rubio currently leads the Senate Small Business Committee, a once-sleepy panel now suddenly relevant with a small-business lending program at the center of a $2 trillion coronavirus pandemic rescue package passed by Congress last month.
Both Risch and Rubio declined to comment at the Capitol, as did their offices.
Another Republican, Sen. Lindsey Graham, R-S.C., defended Burr and said he believed the lawmaker’s explanation that his trades were based on media reports he saw at that time on the business news channel CNBC.
“I don’t believe he did anything criminally wrong, maybe used poor judgment, I guess, but I know Richard and he’s the one guy I can tell you who actually does watch CNBC Hong Kong,” said Graham. “The bottom line is, let’s just see how this turns out. I’ve got nothing but good things to say about Richard Burr.”
An FBI spokeswoman declined to comment, “in keeping with our standard practice of neither confirming nor denying the existence of our investigations.”
The Justice Department has been investigating stock trades Burr made since March. The inquiry followed a review of public disclosures, first reported by the Center for Responsive Politics and ProPublica, that showed Burr and his wife sold 33 stocks worth between $628,033 and $1.72 million – including many in sectors hard-hit by the pandemic, such as the hotel, restaurant and shipping industries. Burr reportedly received daily coronavirus briefings in the weeks leading up to the February sell-off. His brother-in-law also sold off significant shares in February, ProPublica reported last week.
In early February, Burr co-wrote a Fox News op-ed in which he reassured Americans “the United States today is better prepared than ever before to face emerging public health threats, like the coronavirus.” On Feb. 13, he sold his stocks.
From late February through mid-March, the stock market posted steep declines as the coronavirus reached the United States and states began implementing stay-at-home orders that hampered or shut down large segments of the American economy.
Members of Congress were barred in 2012 from using information not available to the wider public. Burr was one of just three senators who voted against the Stop Trading on Congressional Knowledge (Stock) Act, which extended insider-trading regulations to U.S. senators and representatives. At the time, he called the legislation “ludicrous.”
No one has been charged under the Stock Act, and legal experts say it would be difficult to do so given court rulings in a prior investigation involving health-care stocks.
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The Washington Post’s Matt Zapotosky and Paul Kane contributed to this report.