Sen. Warren pushes SEC on Federal Reserve stock trades
Warren wants officials investigated for possible violations of insider trading rules
Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell testify to Congress.
Sen. Elizabeth Warren, D-Mass., has called for the Securities and Exchange Commission to open investigations into whether securities trades made by high-level officials at the Federal Reserve may have broken any insider trading rules.
In a letter to SEC Chair Gary Gensler, Warren pointed to new revelations that Federal Reserve Vice Chair Richard Clarida moved between $1 million and $5 million out of a bond fund and into a stock fund on Feb. 27, 2020 – the day before Fed Chair Jerome Powell issued a statement signaling possible action amid growing concern over COVID-19's emergence in the U.S.
WASHINGTON, DC - JULY 22: (L-R) Sen. Elizabeth Warren (D-MA) speaks during a news conference concerning the extension of eviction protections in the next coronavirus bill, at the U.S. Capitol on July 22, 2020 in Washington, DC. Amid economic hardship …
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Just weeks ago, Warren noted, disclosures revealed that Dallas Fed chief Robert Kaplan made multi-million-dollar stock trades last year, while Boston Fed President Eric Rosengren made several trades involving real estate investment trusts. Kaplan and Rosengren both abruptly retired last week after Powell vowed to make trading rules for Fed officials more stringent.
Now, Warren says the SEC should look into whether any Fed officials have violated the law with their trading activities.
Robert Kaplan, president and chief executive officer of Federal Reserve Bank of Dallas, left, (Photographer: Cooper Neill/Bloomberg via Getty Images), Federal Reserve Chairman Jerome Powell, center. (Susan Walsh/Pool via REUTERS/File Photo). Boston … (Cooper Neill/Bloomberg via Getty Images | Susan Walsh/Pool via REUTERS | Photo by Jessica Rinaldi for The Boston Globe via Getty Images)
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"The reports of this financial activity by Fed officials raise serious questions about possible conflicts of interest and a reveal a disregard for the public trust," the senator wrote, adding, "they also reflect atrocious judgement by these officials, and an attitude that personal profiteering is more important than the American people’s confidence in the Fed."
Warren asked Gensler to investigate the extent, timing, and rationale for trades made by Fed officials, "the extent to which these trades may have been influenced by non-public information in possession of the individuals making the trades," and "whether these trades may have represented violations of provisions that bar individuals from ‘purchasing or selling a security while in possession of material nonpublic information,’" citing the Insider Trading Sanctions Act of 1984.
The U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler Photographer: Andrew Harrer/Bloomberg via Getty Images (Photographer: Andrew Harrer/Bloomberg / Getty Images)
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Warren also continued on her warpath against Powell, whom she called "a dangerous man" last week. "It is not clear why Chair Powell did not stop these activities, which corrode the trust and effectiveness of the Fed," she wrote.
Warren has been pushing legislation that would prohibit federal lawmakers, senior aides, White House staff, and other officials from owning individual stocks. She is also seeking to have Powell replaced by a Democrat.