Republican senator Richard Burr is being sued for securities fraud after taking part in insider trading, selling stocks in Wyndham Hotels on the basis of confidential information regarding the severity of the coronavirus.
After gaining insider knowledge of the effects the coronavirus was likely to have on the stock market as part of his state role, the senator and his wife promptly sold up to $1.7million of stocks, $150,000 of which was in Wyndham Hotels.
Since the day Burr made the sale in February the hotel chain’s stocks have reportedly dropped from $59.10 to $28.83.
Hotels have taken a particularly great financial hit since the outbreak of COVID-19, with some owners reporting occupancies as low as 5%.
Burr is now being sued by shareholder Alan Jacobson, who suggests that the senator reassured the public that the coronavirus situation was in control for his own financial means.
The lawsuit against Burr says: “Senator Burr owed a duty to Congress, the United States government, and citizens of the United States, including Plaintiff, not to use material nonpublic information that he learned by virtue of his duties as a United States Senator in connection with the sale or purchase of any security.
“Senator Burr breached that duty by selling stock, including Wyndham stock, based on that material nonpublic information.”
Burr was one of only three senators to vote against the 2012 Stock Act, which the lawsuit claims he is in breach of.
Wyndham is an international hotel company with 20 well-known brands under its umbrella.