By Dean Seal

Law360 (March 24, 2020, 7:18 PM EDT) -- Already facing intense public backlash and calls for his resignation, U.S. Sen. Richard Burr of North Carolina was hit with a lawsuit Monday for unloading his stock holdings just before the coronavirus pandemic roiled the U.S. economy.

A shareholder of Wyndham Hotels & Resorts Inc. accuses the Republican senator of acting "as a scofflaw in a time of national crisis" by selling up to $1.7 million in stock on Feb. 13 after receiving confidential briefings about the potential impact of COVID-19's spread and while he was assuring the public that the U.S. was equipped to handle the pandemic.

"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," according to the lawsuit, which was filed in D.C. federal court. "Senator Burr breached that duty by selling stock, including Wyndham stock, based on that material nonpublic information."

The Wyndham investor, Alan D. Jacobson, is the first to accuse Burr of "exploiting material information unavailable to the public" in a lawsuit, but the Senate Intelligence Committee chairman came under fire last week after a pair of nonprofits reported that he and his wife had sold stock holdings valued at between $628,000 and $1.72 million.

The stock sales have received criticism even from GOP allies, including Fox News host Tucker Carlson, who last week called for Burr's resignation if he could not explain the stock dump. Burr took to Twitter on Friday to say that he had relied solely on public news reports in deciding to sell his holdings and has asked the Senate Ethics Committee to open a review of the matter.

Among Burr's sales was up to $150,000 worth of stock in the Wyndham hotel chain, which Jacobson said in his lawsuit Monday has lost almost two-thirds of its value since Feb. 13.

The suit alleges that Burr, who is also a member of the Senate Committee on Health, Education Labor and Pensions, received daily confidential updates from the intelligence community about the COVID-19 outbreak in January and February while the public was being told by the federal government that the pandemic would not significantly impact the U.S. economy. On Feb. 7, Burr penned an op-ed on Fox News stating that "the United States today is better prepared than ever before to face emerging public health threats like the coronavirus."

Less than a week later, Burr and his wife made 33 separate transactions that unloaded "all or most" of Burr's assets in what the complaint called "his largest stock selling day of at least the past 14 months."

The lawsuit asserts violations of the STOCK Act, which prohibits members of Congress from exploiting private information derived from their position for personal gain, and seeks compensatory damages sustained as a result of Burr's alleged wrongdoing.

"This has nothing to do with political affiliation," Jacobson's attorney, Eric George, told Law360. "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."

Burr's office did not respond to a request for a comment Tuesday.

Jacobson is represented by Eric M. George and Thomas P. O'Brien of Browne George Ross LLP.

The case is Jacobson v. Burr, case number 1:20-cv-00799, in the U.S. District Court for the District of Columbia.

--Editing by Michael Watanabe.

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