Power over … Why US officials ignore ethics and the Securities Act with

The Wall Street Journal published an article about two weeks ago on the number of judges who hold or trade shares in the companies they direct in the proceedings. Contributions identify 131 federal judges did this nationwide between 2010 and 2018. Imagine! It’s actually pretty hard to believe.

Turn on… is a monthly opinion columnist for Marc Powers who has spent much of his 40-year legal career handling complex securities cases in the United States after joining the SEC. He is currently an Assistant Professor at Florida International University College of Law, teaching a course on Blockchain, Cryptocurrency and Regulatory Considerations.

There seem to be moral reasons for the judges not to put themselves in this situation. When filing cases, the parties are required to disclose the public companies associated with that party so that the judges can assess whether they have potential conflicts in handling a case, or whether or not the particular case is assigned to them. These conflicts can be due to the fact that the judge knows the parties to the trial or the witnesses personally. It is expected that the written disclosure by the parties will also trigger an obligation on the judge to examine whether they or a family member owns shares in the public company involved in the lawsuit.

There is also a 1974 law prohibiting a judge from presiding over a case when his family members own a litigant’s interest in a public company. It was passed shortly after the Watergate Crisis and the resignation of President Richard Nixon. This is an absolute prohibition; It is not at the discretion of the lawyer. The parties cannot do without this. Judges are supposed to remove or reuse themselves from litigation. Why is this happening and should we tolerate it from the judiciary?

Federal Reserve

Let us now turn to the Federal Reserve, which is part of the executive branch of our government, and its 12 reserve bankers. Boston and Dallas Federal Reserve Bank presidents Eric Rosengren and Robert Kaplan both resigned last month, possibly on allegations leaked that they traded stocks over the past year while also helping to shape our country’s macroeconomic direction to determine. For me, this is definitely the bad behavior of these former presidents. They constantly know the secret of how the Fed can deploy certain monetary policy tools that favor certain industries and, consequently, the stock prices of companies in those industries.

Another issue of the Wall Street Journal last week said report that Fed Chairman Jerome Powell has imposed far-reaching personal investment restrictions on the Fed chairman and seven governors on the Central Bank’s board of directors. These include a ban on buying or selling individual stocks, a one-year hold period, and a 45-day pre-approval process for buying or selling mutual funds. No wonder that the crypto crowd is losing trust in our institutions and is looking for automated technologies like blockchain to clean up us and offer everyone a level playing field. .

Securities Act 2012

While it may seem to many that there is nothing forbidding law enforcement or Federal Reserve officials from owning or trading stocks prior to this new Powell investment policy, I disagree. Acceded to the Securities Act 2012, happen by Congress in April of that year during Barack Obama’s administration. “Stocks” stands for “Stop Trading in Congressional Knowledge”. Noticeable, isn’t it? Congress loves its abbreviations.

The STOCK Act applies to members of Congress, executive officials – including the President and Vice-Presidents – as well as judicial officers and staff. The stated purpose of the action is:

“Congressional Members and Staff Prohibition [and the executive and judicial branch] from using non-public information obtained from their official positions to personal gain [or profit], and for other purposes.“

It was passed in part because “political intelligence” companies sprang up and hedge funds were advising on the possibility of government action. These companies sometimes learned from government officials who were not publicly available and passed it on to hedge fund managers, who traded stocks based on that information. In addition, there is a reporting obligation for securities transactions.

Before the law was passed, regulators and prosecutors were faced with a dilemma that the securities laws on insider trading were somewhat unclear as to whether the source of information – government officials – could do so. The law makes it clear that this is wrong and indeed a crime. Part of the law is specifically aimed at these government officials and states that “every member of Congress or an employee of Congress has obligations arising out of a relationship of trust.” It also states that insured government employees “are not exempt from insider trading bans resulting from securities laws”.

With the disclosure of the trading activities of several Fed attorneys and chairmen, the question now arises whether they are in possession of non-public information and not using it to trade stocks. As for the argument, I think that a judge is clearly in possession of non-public information before he or she has passed a judgment in favor of any party to a dispute, before a decision has been made in writing or in writing. It will be even more difficult for a Fed chairman. Don’t they always have non-public information, which means that any trade in stocks to avoid losses or gains from the Fed’s impending policies could be viewed as a violation of this law?

I am not yet aware of any criminal prosecution under the German Stock Corporation Act. The use of Action is closest to 2018 accusation by former Congressman Chris Collins. The insider trading charge, however, relates to his alleged training on the board of directors of a public company, not his congressional duties. Things get interesting when the Securities and Exchange Commission or criminal investigations are conducted based on the WSJ reports in the coming days or months.

Marc Powers He is currently an adjunct professor at Florida International University School of Law, where he teaches Blockchain, Cryptocurrency, and Regulatory Considerations and Fintech Law. He recently completed his internship with the law firm Am Law 100, where he both built the national securities litigation and law enforcement team and served in the company’s hedge fund industry. Marc began his legal career in the SEC’s Enforcement Division. In his 40 years as a lawyer, he has been involved in representations including the Bernie Madoff Ponzi scheme, a recent presidential pardon, and the insider trading lawsuit against Martha Stewart.

Views expressed are those of the author alone and do not necessarily reflect the views of Cointelegraph or Florida International University College of Law or its affiliates. This article is for general informational purposes only and is not intended and should not be viewed as investment or legal advice.

Follow the Youtube Channel | Subscribe to telegram channel | Follow the Facebook page