Wednesday, September 22, 2021 9:31:08 AM
The Justice Department Has Serious Grounds to Subpoena Trading Records from Dallas Fed President Robert Kaplan
By Pam Martens and Russ Martens
September 20, 2021
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;
“or (2) the securities are long-term federal government securities, the market value of which does not exceed $50,000.”
There was nothing de minimis about Kaplan’s trading of individual stocks. According to his financial disclosure form for 2020, Kaplan made “multiple” purchases and sells of greater than $1 million per transaction in 11 individual stocks. Three of those were interest-rate sensitive Big Tech stocks (Amazon, Apple and Facebook) that rose between 75 percent to 90 percent from their March 2020 lows, in no small part because of the interest rate cuts and other interventions of the Federal Reserve in 2020. See chart below.)
The E-mini S&P 500 futures contract can be leveraged by as much as 95 percent. Kaplan’s financial disclosure form indicates that he made “multiple” purchases and sells of some form of S&P 500 futures contract in transaction amounts of “over $1,000,000.” Currently, the public has no idea of how much “over $1,000,000” that futures trading amounts to or when it occurred.
Kaplan previously worked for 22 years at one of the most sophisticated trading firms on the globe, Goldman Sachs. Kaplan rose to the rank of Vice Chairman at Goldman Sachs and was making $17.5 million in annual compensation in 2005. According to SEC filings, on February 7, 2005, eight months before Kaplan joined the Harvard Business School, Kaplan held $266 million in Goldman Sachs’ stock.
In short, Kaplan was an extremely wealthy man who could have simply bought triple-A rated, tax-free municipal bonds and lived very comfortably the rest of his life, while avoiding notoriety for himself, his family and the central bank of the United States, the Federal Reserve.
Kaplan became President of the Federal Reserve Bank of Dallas in September of 2015. The Dallas Fed is one of the 12 regional Fed banks that make up the Federal Reserve System. Its President rotates on and off the Federal Reserve’s interest rate setting and policy making Federal Open Market Committee (FOMC).
Kaplan was a voting member of the FOMC in 2020 and thus had access to non public, market moving information regularly throughout 2020.
In a normal year, the FOMC votes and announces market moving information just eight times a year – about every six weeks. The general public doesn’t get to read the minutes of these meetings until three weeks later. The minutes themselves can also move markets. The voting members of the FOMC know ahead of time what is in those minutes that will move markets — up or down. The communications team at the Dallas Fed has inexplicably declined to say if Kaplan was shorting the market in 2020. Were a voting member of the monetary policy setting committee of the U.S. central bank to short the market during one of the worst economic and health crises in U.S. history, it would be an act of unprecedented personal greed, putting self before country
Continued below:
https://wallstreetonparade.com/2021/09/the-justice-department-has-serious-grounds-to-subpoena-trading-records-from-dallas-fed-president-robert-kaplan/
By Pam Martens and Russ Martens
September 20, 2021
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;
“or (2) the securities are long-term federal government securities, the market value of which does not exceed $50,000.”
There was nothing de minimis about Kaplan’s trading of individual stocks. According to his financial disclosure form for 2020, Kaplan made “multiple” purchases and sells of greater than $1 million per transaction in 11 individual stocks. Three of those were interest-rate sensitive Big Tech stocks (Amazon, Apple and Facebook) that rose between 75 percent to 90 percent from their March 2020 lows, in no small part because of the interest rate cuts and other interventions of the Federal Reserve in 2020. See chart below.)
The E-mini S&P 500 futures contract can be leveraged by as much as 95 percent. Kaplan’s financial disclosure form indicates that he made “multiple” purchases and sells of some form of S&P 500 futures contract in transaction amounts of “over $1,000,000.” Currently, the public has no idea of how much “over $1,000,000” that futures trading amounts to or when it occurred.
Kaplan previously worked for 22 years at one of the most sophisticated trading firms on the globe, Goldman Sachs. Kaplan rose to the rank of Vice Chairman at Goldman Sachs and was making $17.5 million in annual compensation in 2005. According to SEC filings, on February 7, 2005, eight months before Kaplan joined the Harvard Business School, Kaplan held $266 million in Goldman Sachs’ stock.
In short, Kaplan was an extremely wealthy man who could have simply bought triple-A rated, tax-free municipal bonds and lived very comfortably the rest of his life, while avoiding notoriety for himself, his family and the central bank of the United States, the Federal Reserve.
Kaplan became President of the Federal Reserve Bank of Dallas in September of 2015. The Dallas Fed is one of the 12 regional Fed banks that make up the Federal Reserve System. Its President rotates on and off the Federal Reserve’s interest rate setting and policy making Federal Open Market Committee (FOMC).
Kaplan was a voting member of the FOMC in 2020 and thus had access to non public, market moving information regularly throughout 2020.
In a normal year, the FOMC votes and announces market moving information just eight times a year – about every six weeks. The general public doesn’t get to read the minutes of these meetings until three weeks later. The minutes themselves can also move markets. The voting members of the FOMC know ahead of time what is in those minutes that will move markets — up or down. The communications team at the Dallas Fed has inexplicably declined to say if Kaplan was shorting the market in 2020. Were a voting member of the monetary policy setting committee of the U.S. central bank to short the market during one of the worst economic and health crises in U.S. history, it would be an act of unprecedented personal greed, putting self before country
Continued below:
https://wallstreetonparade.com/2021/09/the-justice-department-has-serious-grounds-to-subpoena-trading-records-from-dallas-fed-president-robert-kaplan/
Dan 
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