Elizabeth Warren urges SEC to investigate Federal Reserve Board’s trading activities

Texas News Today

Senator Elizabeth Warren (D., Massachusetts) told the Securities and Exchange Commission whether personal financial investments by senior Federal Reserve Board officials, including Vice-Chair Richard Clarida, violated insider trading rules. I told you to check.

Warren said in a letter to SEC Chairman Gary Gensler on Monday that the Fed should decide on the legality of a “morally questionable deal” by three Fed officials. Boston Fed Chairman Eric Rosengren and Dallas Fed Chairman Robert Kaplan resigned following a disclosure form released in early September, and the Wall Street Journal first reported that the two men were personal last year. It was widely traded in the stock.

“”“We now understand that our practices need to be revised and are in the process of developing ideas and recommendations for this.”

— Federal Reserve Chairman Jerome Powell

A third official, Clarida, started with $1 million from mutual funds on February 27, 2020, a day before Federal Reserve Board Chairman Jerome Powell issued a statement showing potential interest rates. Between $5 million was moved to two other funds. Take the cut because of concerns about the coming pandemics.

The SEC did not immediately respond to a request for comment.

In a pre-parliamentary testimony on September 28, Powell promised to renew the Fed’s policy on how its leaders manage private investment to reduce the emergence of conflicts of interest. He acknowledged that the rules by Mr. Kaplan and Mr. Rosengren allowing transactions, even if they meet each bank’s existing protocols, are insufficient to maintain public trust. ..

Referring to the business activities of Mr. Kaplan and Mr. Rosengren, “we now understand that we need to revise our practices and are developing ideas and recommendations for this.” said. He did not mention Mr Clarida’s financial disclosures, which were announced in May of this year and first reported on October 1 by Bloomberg News.

Warren asked the SEC to find out how private information available to Fed policymakers affected transactions and whether they violated provisions prohibiting such transactions. ..

“”“There is no legitimate moral or financial basis. [Federal Reserve Vice Chairman Richard Clarida] Or other government officials involved in these dubious market gimmicks…”

— Senator Elizabeth Warren

Warren wrote in a letter that the business activities of the three “reflect the cunning decisions of these officers.” About Mr. Clarida, he wrote: “While he and other government officials are involved in these questionable market tactics, markets and the economy.”

Unlike Kaplan and Rosengren, Clarida was not actively trading individual securities. An investment trust or exchange-traded fund is a basket of stocks, bonds or other securities. Last year, Clarida disclosed a total of five transactions in the two days of late February and early August.

In a transaction on February 27, 2020, Clarida sold a bond fund and bought equal amounts of assets in two equity funds. In the last week of February, the financial markets started a phase of heavy volatility, with stocks falling and bonds improving.

Clarida’s calendar shows that on February 27, 2020, he spoke with Fed board members at 4:45 p.m. Powell took the extraordinary step of issuing a statement on February 28, 2020, saying the Fed “acts appropriately to support the economy”, indicating a possible interest rate cut.

A spokesman for the Federal Reserve Board said in a statement that Mr Clarida’s 2020 transaction “represents a pre-planned account rebalancing” that reflects similar activity to those disclosed in April 2019. where did it go. This is a coronavirus emergency, not during a power outage. The selected fund was selected with the prior approval of the Ethics Officer of the Board,” said a spokesperson.

Last year, Warren introduced legislation prohibiting senior government officials from trading individual stocks. Clarida’s work did not violate the proposed additional restrictions.

Chris Low, chief economist at FHN Financial, said in a note to clients on Monday that the activity “seems to be just the kind of autopilot trade civil servants should be doing.” “Unfortunately for Clarida … the timing stinks, whether by chance or not.”

The White House is considering reappointing Powell or appointing his successor when his four-year term as chairman ends in early February, while at the same time providing financial disclosures to Fed officials . The controversy about this is getting deeper. Powell was considered a prime candidate for reappointment until recently. Federal Reserve Bank Governor Lyle Brainard, a central bank dignitary who oversees the Reserve Bank, is another top candidate for this job.

Warren did not address the issue of dealings with Powell at last week’s hearing, instead strongly criticizing his record of banking regulation, and if President Biden nominated him for a second term. He said he would oppose the confirmation. Powell’s efforts to ease financial regulations imposed after the 2008 crisis “make you a dangerous person to lead the Fed,” she told him last week.

write to Nick Timiros ([email protected])

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Elizabeth Warren urges SEC to investigate Federal Reserve Board’s trading activities

Source Link Elizabeth Warren urges SEC to investigate Federal Reserve Board’s trading activities


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