Courtesy of Pam Martens
Federal Reserve Building in Washington, D.C.
Fed watchers are stunned that Fed Chair Jerome Powell thinks it is appropriate for the Fed to investigate itself following one of the most arrogant and brazen trading scandals in the history of the Fed.
The focal point of that scandal is Robert S. Kaplan, the President of the Dallas Fed, who held non-public, market moving information throughout last year but nonetheless traded in and out of tens of millions of dollars of individual stocks as well as – wait for it – S&P 500 futures, an instrument used by speculators to make highly leveraged, directional bets on the market. S&P 500 futures extend the trading day to almost 24/7 from Sunday evening to Friday night.
The type of trading done by Kaplan appears to be expressly prohibited by the Code of Conduct of the Dallas Fed. Appendix A on “Disqualifying Interests” of the Code of Conduct reads as follows:
“De minimis exemption for a matter of general applicability. An employee may participate in a particular matter of general applicability, such as rulemaking, where the disqualifying financial interest arises from ownership by the employee, his or her spouse or minor children of securities issued by one or more entities affected by the matter, if:
“(1) the securities are publicly traded, or are municipal securities, the market value of which does not exceed; (a) $25,000 in any one such entity; and (b) $50,000 in all affected entities;
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