(Bloomberg) -- Senator Elizabeth Warren called on the Securities and Exchange Commission to investigate whether stock transactions by top Federal Reserve officials violated insider trading rules.
“The reports of this financial activity by Fed officials raise serious questions about possible conflicts of interest and reveal a disregard for the public trust,” Warren wrote in a letter to SEC Chairman Gary Gensler. “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 cited a Bloomberg News report on Friday that Fed Vice Chair Richard Clarida’s 2020 financial disclosures show he traded between $1 million and $5 million out of a bond fund into stock funds one day before Chair Jerome Powell issued a statement flagging possible policy action as the pandemic worsened. Two regional Fed chiefs recently announced their departures following revelations about their trading activity last year.
A Fed spokesman, speaking on Clarida’s behalf, said in an Oct. 1 statement that the transactions were a “pre-planned rebalancing to his accounts,” and were “executed prior to his involvement in deliberations on Federal Reserve actions to respond to the emergence of the coronavirus and not during a blackout period.”
“There is no justifiable ethics or financial rationale for him or any other government official to be involved in these questionable market machinations while having access to non-public information and authority over decisions that have extraordinary impacts on markets and the economy,” Warren said.
Dallas Fed President Robert Kaplan and Boston’s Eric Rosengren announced Sept. 27 that they were stepping down after their trading activity last year drew scrutiny. Rosengren cited a long-standing and worsening health condition in explaining his early retirement.
(Updates with more Warren comment in fifth paragraph.)
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