Senator Elizabeth Warren called on the Securities and Exchange Commission to open an inquiry into transactions involving high-ranking Federal Reserve officials.
The Massachusetts Democrat Warren called for the agency to conduct a “sweeping review of all securities trades” by Fed officials to determine if they violated insider trading laws.
“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,” Warren wrote in a letter to SEC Chairman Gary Gensler.
Warren said, “reflect atrocious judgment by these officials, and an attitude that personal profiteering is more important than the American people’s confidence in the Fed.”
Following Warren’s letter, the Fed sent a statement Monday evening stating that it had begun conversations with the Fed’s Office of Inspector General last week to launch an independent investigation.
“We welcome this review and will accept and take appropriate actions based on its findings,” a Fed spokesperson said.
“If these trades were based on Fed officials’ knowledge of non-public, market moving information, they may have represented potentially illegal activity,” Warren wrote.
Powell Stated that the Fed is Aware of the Need to Revise its Guidelines
The Fed’s own guidelines for senior officials say they should “carefully avoid engaging in any financial transaction the timing of which could create the appearance of acting on inside information concerning Federal Reserve deliberations and actions.”
“It’s really not working now. We understand that,” Powell said of the Fed’s existing rules. “The appearance is obviously unacceptable.”
Warren questioned why Powell did not prevent the trading activity, which she claimed “corrode the Fed’s credibility and efficacy.”