After Two Years, There’s Still No Law Enforcement Report on Former Dallas Fed President Robert Kaplan’s Trading Like a Hedge Fund Kingpin
Kaplan didn’t just trade in and out of stocks while a voting member of the interest-rate setting committee of the Fed
Etienne Note: This article also appears in “Government”, Media and Academia Criminality Exposed, A digest of HUNDREDS and HUNDREDS of articles exposing and suggesting inter-generational organized crime's control of the "Government," Media and Academia by the Art of Liberty Foundation. You can view the other articles or subscribe on Telegram: https://t.me/Government_Scams
By Pam Martens and Russ Martens
To understand how truly bizarre and alarming the trading scandal case involving former Dallas Fed President Robert Kaplan is, some important background is necessary:
Kaplan didn’t just trade in and out of stocks while a voting member of the interest-rate setting committee of the Fed (known as the Federal Open Markets Committee or FOMC); Kaplan also traded in and out of $1 million+ lots of S&P 500 futures. That is astonishing; unprecedented; and lacks any viable justification for a sitting Fed official. (See Kaplan’s financial disclosure forms from 2015 through 2020 while employed at the Dallas Fed.) Kaplan resigned from the Dallas Fed in September 2021, the same month that the trading scandal went viral in the news.
S&P 500 futures allow an individual to trade almost around the clock from Sunday evening to Friday evening, unlike stock exchanges in the U.S. which 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 obtain as much as 95 percent leverage on this contract – far more than the 50 percent leverage that is available for stock trades.
Kaplan was a sophisticated Wall Street veteran who would have known how to turn inside information at the Fed into highly profitable trades. Kaplan had 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 while employed as President of the Dallas Fed could subject him to an investigation for insider trading. (Goldman Sachs has declined to tell Wall Street On Parade if Kaplan did his trading at Goldman Sachs. The fact that Kaplan lists proprietary products from Goldman Sachs as “GS” on his financial disclosure forms that he filed while employed at the Dallas Fed suggests that he did at least some of his trading through Goldman Sachs.)
Kaplan served as a voting-member of the FOMC during 2020 – a year of unprecedented interventions in the markets by the Fed in its effort to deal with the economic downturn from the COVID-19 pandemic. As a voting member of the FOMC, Kaplan would have had advance knowledge of the Fed’s planned interventions. Throughout 2020, the Fed made dramatic market-moving announcements of interest rate cuts, the creation of a series of emergency lending facilities and took other emergency measures. The Dow Jones Industrial Average first gyrated to a year-to-date loss of 30 percent in late March 2020 and then climbed on the Fed’s various announcements to set an all-time high in November 2020. The moves presented an opportunity for windfall profits for a nimble trader.
In 2021, the year that Kaplan’s exorbitant trading was exposed in the press, the following sentence appeared in 11 of the 12 regional Federal Reserve banks’ codes of conduct: (The Atlanta Fed had worded its statement differently but with the same overall meaning.)
“Each employee has a responsibility to the Bank and to the System to avoid conduct which places private gain above his or her duties to the Bank, which gives rise to an actual or apparent conflict of interest, or which might result in a question being raised regarding the independence of the employee’s judgment or the employee’s ability to perform the duties of his or her position satisfactorily.”
Not only was Kaplan’s trading outrageously out of bounds for a Fed official, but Kaplan went one step further. He brazenly refused to list the specific dates of his stock and S&P 500 futures trades as specifically required by the financial disclosure forms. James Hoard, part of the Communications team at the Dallas Fed, denied our and other media requests for the dates of Kaplan’s trades, thus preventing the press from doing its job. To this day, the public does not know if Kaplan was making millions of dollars of trades in S&P 500 futures, or tens of millions or hundreds of millions of dollars.
The Dallas Fed also refused our request to know if Kaplan had been shorting the market in 2020 (betting it would go down) via S&P 500 futures.
After getting the runaround from the Dallas Fed, on October 12, 2021, Wall Street On Parade filed a Freedom of Information Act (FOIA) request with the Federal Reserve Board of Governors seeking the specific dates on which Kaplan had made purchases and sales in S&P 500 futures contracts in 2020. According to Kaplan’s financial disclosure forms, he had made “multiple” transactions of over $1 million in S&P 500 futures during 2020.
The Fed’s official financial disclosure forms instructed filers to provide the “month, day, year” for each purchase and each sale of securities. In 2020, every other Fed Bank President followed those instructions. But not Kaplan. Throughout his tenure at the Dallas Fed, Kaplan listed only the word “multiple” where the specific date should have appeared on the form.
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