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Dallas Fed, Home to the Largest Trading Scandal in Fed History, Quietly Runs a Help-Wanted Ad for a New General Counsel and Ethics Officer

Courtesy of Pam Martens

Robert Kaplan, President of the Dallas Fed

Robert Kaplan, Former President of the Dallas Fed

The Dallas Fed has not publicly announced the retirement or dismissal of its General Counsel, Sharon Sweeney. And yet, it is currently running a help-wanted ad to replace her. Sweeney is still listed as General Counsel on the Dallas Fed’s website. We placed a call to the bank’s media contact this morning to clarify the details and left a message. We’ll update this article if we receive further information.

Sweeney has been with the Dallas Fed for the past 36 years. She doubles as the Dallas Fed’s Ethics Officer and put her signature to former Dallas Fed President Robert Kaplan’s outrageous financial disclosure forms, year after year. Those forms indicated that Kaplan was trading in and out of S&P 500 futures contracts in “over $1 million” trades – even in 2020 when he sat as a voting member of the Fed’s Open Market Committee and was privy to sensitive, market moving operations of the Fed to deal with plunging markets and business closures as a result of the pandemic. Kaplan also made “over $1 million” trades in numerous individual stocks. (See Kaplan’s financial disclosure forms from 2015 through 2020 here.)

After news of Kaplan’s trading went viral this year, he stepped down on September 27. The same day, the President of the Boston Fed, Eric Rosengren, also stepped down. Rosengren had been trading in and out of real estate investment trusts in 2020.

S&P 500 futures allow an individual to trade almost around the clock from Sunday evening to Friday evening, while stock exchanges in the U.S. are open only on weekdays from 9:30 a.m. to 4:00 p.m. ET. S&P 500 futures gave Kaplan access to making directional bets on where the market would go after the stock market closed, which is typically when the Fed makes market-moving announcements. The most popular and liquid S&P 500 futures contract is the E-mini. A trader can get as much as 95 percent leverage on this contract – far more than the 50 percent leverage that is available for stock trades.

Kaplan is a sophisticated Wall Street veteran who worked at Goldman Sachs for 22 years, rising to the rank of Vice Chairman. As such, he would have certainly understood that the type of trading he was doing could subject him to an investigation for insider trading as well as removal from his job. But instead of avoiding all trading activity, Kaplan jumped in with both feet according to his financial disclosure form for 2020.



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