Who leaked the S&P downgrade news?
Wall Street was given plenty of warning, and now the SEC may be looking into who knew what and when.
Unless it was all a huge coincidence, it's likely that someone in the know leaked the information. The questions are who and whether the leak led to early insider trading.
That's what the Securities and Exchange Commission is reportedly investigating. The SEC has asked Standard & Poor's to disclose who exactly knew about the downgrade before it was announced, the Financial Times reports. It's the start of a preliminary look into potential insider trading.
It will be a tough nut to crack. It's one thing to ask who knew the downgrade would take place. It's entirely a different beast to figure out where the information went from there -- and then to find out whether any improper insider trading was committed based on the information.
There's a very real consequence at stake. A 2006 law says a credit ratings firm like S&P could have its license revoked if it did leak information about the downgrade, MarketWatch reports.
The SEC could hunt for evidence of anyone shorting Treasury securities, one law professor told MarketWatch. "Once you find out who is trading in usual large volumes, then you can look into whether they have associations with anyone at S&P," the professor, John Coffee, added.
Wall Street already knew that a downgrade was likely. S&P had already put the U.S. on "CreditWatch negative" -- saying there was at least a 50% chance of a downgrade if lawmakers didn't "change the trajectory" of the nation's debt rate.
It seems like the SEC would have to investigate leaks on the government side as well. S&P notified the Treasury Department about the downgrade before the public, and someone from Treasury could have blabbed. Will the SEC also look at whether government employees made improper trades?
Standard & Poor's has done something few people thought possible: unite Democrats and Republicans. Both are demanding more scrutiny of the agency and possibly restrictions on its influence, The Wall Street Journal reports.
The Senate Banking Committee is reportedly considering a hearing to investigate the process that led to S&P's downgrade. Banking regulators "almost made it a given that you have to have these ratings," said Randy Neugebauer, a House Republican from Texas, the Journal reported. "What we're saying is we don't want them totally relying on ratings in making those determinations."
There was a huge put places on Morgan Stanley just prior to this announcment. I'm curious if that trail could lead back to the leak.
As for the market reaction, it doesn't matter if there was a leak or not. Whether the news went out Friday/Monday the market would have reacted the same. Question is, "Who knew ahead of time so they could make investment decisions prior to anyone else and who gained from the prior knowledge?" Easy to find out. Just look at the brokerage accounts of those within S&P/Treasury and anyone else who knew. I agree with Joed2, that politicians are looking to blame someone for their ineptitude. Heck, the President and other policians already blamed S&P when it was their fault. ALL of our problems in this country can be traced back to the government. I don't like Obama. But, he is not responsible for the budget problems as he cannot make any decisions. Congress controls the budget, taxes, deficit, wars. It is congress that passes regulations, taxes, etc. SO, if you are unhappy with things, then vote for new Representatives-Senators-Congressman. I am voting out anyone who has been there more than one term as they have been part of the problem.
Looks like the Goverment is starting to feel what the American People
have been going through with these bogus credit rating companies.
Maybe now all their credit cards and home equity lines will all be slashed
down to what they owe and they won't be able spend Pauls money to pay Peter anymore.
Perhaps the SEC is under extreme pressure to investigate S&P's business ethics, and or their reliability in the stock exchange. Revoking S&P's licence if indeed their was a leak regarding the down grade seems more then fair. And especially so if someone is manipulating events for private gain.
The interesting part about greed and power, those seeking it eventually find they have lost at thier own game.
there is no doubt there was a leak and S&P people in the know gained from it as well as their friends. now, classic law, is PROVE IT!
they likely set themselves up pretty deep on the cash flow but believe me, the cash flow certainly went to the right island in the pacific!
Buffet also calls for the Gov't to tax the billionaires a lot more. He says the tax rates are not fair.
Let's have a flat tax where everyone pays the same to be fair. And have a small Federal sales tax to pay for SS and Medicare and just use that money for those two items.
The problem with giving this Gov't more money is not the idea of more taxes it is the idea of more wasteful spending when they get that money. The politicians use it to buy votes by giving it away to those that don't want to work.
The Federal Gov't should have to balance its budget just like the States do and individuals should do.
It would seem that they notified the Treasury Department to insure someone else other than S&P knew before hand so they could point the finger at them.
There was a much much much more important event that happened almost ten years ago, similar to the US downgrade. I am referring to 9-11. Certain people made millions shorting airline stock. Shorting of airline stock was so heavy, in the days leading up to 9-11 that it set a record, for short selling. After 9-11 most of the major newspapers had articles similar to this article, about the SEC going to do investigating about who did the short selling. No arrests,, None, Zippo, of what I would call terrorist activity, of knowing about 9-11 before it happened, and doing nothing about it, except using the opportunity to make $$$. I kept a link to one of our major newspapers, story about the short selling prior to 9-11, to remind me how inept, or crooked our SEC actually is. Sorry I do not think it is possible to post a link to the article I kept, on this message board.
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