Sen. Richard Burr steps down as Senate intel chair during probe of coronavirus stock sale

Key Points
  • Sen. Richard Burr stepped down as chairman of the Senate Intelligence Committee amid a federal investigation into his stock sales.
  • The announcement came hours after FBI agents seized Burr's cellphone as part of a criminal probe of 33 stock sales Burr made on Feb. 13, a week before the markets dived on coronavirus fears.
  • Burr received classified intelligence briefings throughout January and early February that contained dire warnings about the virus.
Sen. Richard Burr steps down as Intel Committee chair day after Feds seize cell phone
Sen. Richard Burr steps down as Intel Committee chair day after Feds seize cell phone

WASHINGTON — Sen. Richard Burr stepped down as chairman of the Senate Intelligence Committee on Thursday, a day after FBI agents seized his cellphone as part of a criminal investigation into his stock sales during the early weeks of the coronavirus pandemic.

Speaking to reporters outside his Senate office on Thursday, Burr said the federal criminal probe 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." 

Federal agents served a search warrant Wednesday to Burr's attorney for the senator's cellphone, NBC News reported, citing Justice Department officials. They also said the seizure was approved at the highest levels of the Justice Department, a phrase widely understood to mean that Attorney General Bill Barr signed off on the decision.

After serving the warrant, the FBI went to Burr's home to retrieve the phone Wednesday night. Burr said the FBI's visit was "a part of the investigation, and everybody ought to let this investigation play out."

The North Carolina Republican also said he has been cooperating with investigators "since the beginning."

"Senator Burr contacted me this morning to inform me of his decision to step aside as Chairman of the Intelligence Committee during the pendency of the investigation," Senate Majority Leader Mitch McConnell said in a statement Thursday, adding that the leadership change would take effect Friday afternoon.

It was not immediately clear Thursday who would take up Burr's committee gavel during his temporary hiatus: The next highest ranking Republicans on the committee, Idaho Sen. Jim Risch and Florida Sen. Marco Rubio, both chair other Senate committees at the moment, positions they would have to give up in order to chair the Intelligence Committee.

Burr is also still finalizing his committee's bipartisan report on the investigation of Russia's meddling in the 2016 election. The final report represents the culmination of years worth of work both by Burr and by the committee's ranking member, Sen. Mark Warner, D-Va. It is unclear now what role Burr will play, if any, in the release of the report later this year.

Not just Burr 

Also Thursday, a spokesman for Democratic Sen. Dianne Feinstein said she had been questioned by the FBI about stock trades that her husband made, and that she has given documents to the FBI as part of that inquiry.

Feinstein's husband, Richard Blum, sold shares of the biotech company Allogene Therapeutics on Jan. 31 that were worth between $500,000 and $1 million.

But neither Feinstein nor Blum avoided future losses by selling the stock when they did. On the contrary, when Blum sold his shares, Allogene Therapeutics was trading at around $21. Today, the stock is trading at over $40 a share.

GOP Sen. Kelly Loeffler and her husband, New York Stock Exchange chairman Jeffrey Sprecher, also made several large stock sales in the early weeks of the pandemic, which have since drawn scrutiny from federal investigators. 

Sen. Kelly Loeffler, R-Ga., her husband Jeffrey Sprecher participate in Loefflers swear-in reenactment for the cameras in the Capitol on Monday, Jan. 6, 2020.
Bill Clark | CQ-Roll Call | Getty Images

Representatives for Loeffler did not return repeated requests from CNBC Thursday about whether had been contacted by the FBI. But a Loeffler spokeswoman told The New York Times that, "federal authorities had not contacted the senator."

Later on Thursday, however, Loeffler's Senate office issued a slightly different statement, denying any wrongdoing but saying only that the Georgia Republican had not been served with a search warrant, not that federal authorities have not contacted her.

Again, the statement did not address whether or not Loeffler has been questioned by the FBI like Feinstein was, only that "no search warrant has been served on Sen Loeffler."

Still later on Thursday, Loeffler's Senate office issued a third statement, this time acknowledging that Loeffler "has forwarded documents and information to DOJ, the SEC, and the Senate Ethics Committee." This latest statement also said the senator "has welcomed and responded to any questions from day one."

Like other senators, Loeffler received non-public updates from top health officials about the potential impacts of coronavirus. This included a private all-senators briefing on Jan. 24 that was hosted by the Senate Health Committee, on which Loeffler sits.

Starting on Jan. 24, Loeffler and Sprecher sold stocks over the next three weeks worth between $1.3 million and $3.1 million.

A few days after Loeffler started selling her shares, a fourth senator, James Inhofe of Oklahoma, sold stocks on Jan. 27 worth between $180,000 and $400,000, according to public records.

Inhofe, a Republican, says he did not attend the Jan. 24 Senate briefing on coronavirus, and that he plays no role in the management of his investment portfolio. 

Two weeks after Inhofe made his big sale, Burr sold, too.

A focus on Burr

As chairman of the Senate Intelligence Committee, Burr was given access to classified intelligence reports in January and early February that contained dire warnings about the coronavirus. 

On Feb. 13, Burr unloaded shares worth $630,000 to $1.7 million in a one-day sale that involved 33 individual trades

One week later, markets began a steep slide as investors panicked over the potential economic damage from coronavirus.

New questions about Burr's stock sales arose last week, when ProPublica reported that on the day Burr sold his stocks, Feb. 13, his brother-in-law, Gerald Fauth, also sold tens of thousands of dollars worth of stock.

Burr to step down as Senate Intelligence chair during insider trading probe
Burr to step down as Senate Intelligence chair during insider trading probe

Fauth is a former transportation consultant who was appointed by President Donald Trump in 2017 to a seat on the three-member National Mediation Board, a federal agency that helps facilitate labor relations for the transportation industry.

At the time, Burr's attorney Alice Fisher told ProPublica that Burr "did not coordinate his decision to trade on Feb. 13 with Mr. Fauth."

On Thursday, Fisher released another statement saying, in part, "From the outset, Senator Burr has been focused on an appropriate  and thorough review of the facts in this matter, which will establish that his actions were appropriate."

Unlike the other three senators under scrutiny, however, Burr does not deny that he decided to sell the stock himself, and that concerns about coronavirus were his primary motivation for the sale.

"I relied solely on public news reports to guide my decision regarding the sale of stocks," Burr said in a statement in late March. "Specifically, I closely followed CNBC's daily health and science reporting out of its Asia bureaus at the time." 

Taken together, the timing of Fauth's stock sales, plus Burr's admission that he sold his shares because he feared that coronavirus would impact markets may help to explain why Burr's case appears to be moving faster than those of the other three senators under investigation.

According to the LA Times, which first reported the seizure of Burr's phone, federal agents served an earlier warrant on Apple for information about Burr's iCloud account. They then used that information as evidence to obtain a search warrant from a judge for Burr's phone.

It was unclear whether Fauth had also been served with a warrant. CNBC called the number for Fauth's consulting firm, but there was no answer. 

Members of Congress are prohibited by law from using nonpublic information they obtain through their official positions in order to personally profit off the stock market. The STOCK Act that codified this ban was signed by President Barack Obama in 2012, after passing the Senate in a 96-3 vote.

Burr was one of only three senators who voted against the STOCK Act.

--- CNBC's Tom Franck contributed reporting from New York.

9:48 p.m. Update: This story has been updated to include Sen. Loeffler's latest statement.