Elizabeth Warren Demands Information on Fed Official’s Questionable Stock Trades

Sen. Elizabeth Warren (D.Massachusetts), recently sent Jerome Powell a letter requesting more information on stock trades conducted by Richard Clarida, Federal Reserve Vice Chairman. a New York Times reportIt was revealed that Clarida did not disclose the extent of his trades before the stock market crash in 2020.

Clarida reported that Clarida moved last year. Between $1 million and $5,000,000In an investment fund buying shares on February 27th, 2020 – the day before Chair Powell made a major announcement about rule changes at the Fed in preparation for the pandemic.

Clarida, however, recently modified the financial disclosure to reflect a potentially significant trade he made at the same time. On February 24, the vice-chair sold shares in the investment fund. stocks were plunging. Clarida, who was defending himself after news of the February 27, trade, stated that the trade had been planned in advanced, but that the February 24, sale makes this statement seem dubious. The New York Times reported.

Warren believes that the new information raises questions about stock trades at Fed, even though Clarida is leaving the agency. In her letter, she gave Powell a deadline of January 17 to provide all available information about Fed officials’ trades.

“The Fed has failed to respond to two of my Previous inquiries,” Warren wrote. “This refusal to provide information to Congress became even more troubling after a report last week in the New York Times revealed that one Fed official’s trades ‘went further than first disclosed,’ raising fresh questions about the actions and intent of Fed Vice Chair Richard Clarida.”

Warren went on to say that she is “deeply concerned” with the Fed’s refusal to be transparent about stock trades, “rais[ing] suspicions that the Fed may be failing to disclose the full scope of the scandal to the public.” She then cited a March 2020 email in which ethics officials warned Fed officials to refrain from trading stocks as the pandemic was rocking the market, for fear of such trades looking suspicious to the public.

The Massachusetts lawmaker Has been previously requestedThe Securities and Exchange Commission should investigate possible insider trading at Fed. Clarida’s trade is just one of multiple scandals that have emerged from the Fed over past months, including one involving Powell himself, whose confirmation hearing before the Senate Banking Committee is scheduled for Tuesday.

Shortly after news of Clarida’s trades emerged, The American Prospect Powell was the one who revealed this information. sold between $1 million and $5 million in stock just before the stock market crashed in October of 2020 – at the time, the largest drop since the March 2020 crash. Powell had spoken to Treasury Secretary Steve Mnuchin 4 times on the day of sale. He encouraged Congress to pass a stimulus package to help the economy recover.

Warren advocated at the same time for her legislationto ban top politicians, including financial regulators from trading stocks. The Fed took steps after the scandal was exposed. Ban its officials from buying individual securities, but trades like Powell’s are still permitted under the new rules.

In her letter, Warren said that it is crucial not only for the SEC to investigate the agency, but also for the agency to release details of Clarida’s trades, among others, in order for officials to be held accountable by Congress. This demand is especially timely in relation to Powell’s potential confirmation by the Senate, to which Warren is vehemently opposed.

“[T]imely release of this requested information is also critical so that Congress and the public can evaluate the full extent of trading in individual stocks by Fed officials, the extent to which Fed officials were warned of the risks from their trading, and whether the plans you announced to change the Fed’s ethics practices are sufficient to prevent future financial conflicts of interest,” Warren wrote.

The agency’s “continued refusal to release this information severely compounds concerns about the Fed’s lack of transparency and your commitment to fully and honestly addressing the Fed’s broken ethics culture,” she went on.