Former Fed officials' stock trading controversy, Goldman Sachs facing CFTC probe over fees for futures trading, Lex Greensill sues UK govt over 'misuse of private information', CNBC financial pundit arrested by FBI for fraud, Former TV financial analyst arrested for fraud after years in hiding

Two years after the presidents of the Dallas and Boston Federal Reserve banks left their jobs amid revelations they had traded on financial markets while helping to set monetary policy, an internal watchdog has yet to finish a probe into a scandal that has clouded the U.S. central bank's reputation [bc763131]. A report by the Fed's Office of Inspector General has now criticized former regional presidents Robert Kaplan and Eric Rosengren for trades that resulted in conflicts of interest. The report does not accuse them of anything illegal. Kaplan and Rosengren left their posts in September 2021. The report faults Rosengren for not disclosing multiple trades and notes discrepancies in brokerage statements and trading data. Kaplan is faulted for not disclosing specific information regarding the selling of stock option contracts. The scandal, which involved trading on financial markets while also being involved in setting monetary policy, has raised questions about ethics and transparency within the Federal Reserve. The investigation into the scandal is ongoing, and its outcome will have implications for the central bank's credibility. The article highlights the need for the Federal Reserve to address the issue and restore public trust in its operations. The Fed has since revamped its trading rules to prohibit officials from owning stocks, bonds, and cryptocurrencies [9f93cf33].

According to a report by the Financial Times, the trades made by former Federal Reserve officials, including Robert Kaplan and Eric Rosengren, created the appearance of a conflict of interest but did not violate any rules or policies [643e6c0d]. The trades raised concerns about potential conflicts of interest, as the officials were responsible for making decisions that could impact the companies in which they were trading. The internal review by the Fed acknowledged that the trades created an appearance of conflict and highlighted the need for stricter rules regarding officials' personal financial transactions. The issue of potential conflicts of interest among Fed officials has gained attention in recent years, with calls for greater transparency and accountability [643e6c0d].

In a new development, Goldman Sachs is now facing a probe by the Commodity Futures Trading Commission (CFTC) over allegations of improperly charging fees for executing clients' futures trades. The investigation was initiated based on a whistle-blower tip and the CFTC has authorized subpoenas to gather information from Goldman Sachs regarding the fees charged for certain futures block trades [50cb8ce7]. This probe adds to the scrutiny faced by Goldman Sachs and raises concerns about the potential improper practices in the financial industry. The outcome of the investigation will have implications for the reputation and credibility of Goldman Sachs, as well as the broader financial sector. The article emphasizes the need for stricter regulations and oversight to ensure fair and transparent practices in futures trading [50cb8ce7].

Meanwhile, Lex Greensill, the Australian businessman and founder of Greensill Capital, has sued the UK's Department for Business and Trade over alleged misuse of private information. The lawsuit was filed last Thursday and has not been previously reported [4b973418]. Greensill Capital collapsed in 2021 after failing to renew its insurance cover, leading to a prominent lobbying scandal involving former UK prime minister David Cameron. The UK's insolvency service has completed an investigation into Greensill Capital, but the findings are not yet public. Lex Greensill could face disqualification as a company director for up to 15 years. Greensill Capital is also facing legal proceedings in Switzerland, where Lex Greensill has been named as a suspect in a case related to the collapse of a $15.4 billion set of Credit Suisse investment funds. One of Greensill's major clients, GFG Alliance, is under investigation by the Serious Fraud Office over its financing arrangements with the firm. Taxpayers in the UK could be liable for £2 million in redundancy payments made to staff of Greensill Capital's management company. The government has not commented on the legal proceedings [4b973418].

In another news, James Arthur McDonald Jr., a former investment company CEO and TV financial analyst, was arrested in Washington state after more than two years on the run. McDonald faces federal fraud charges in Los Angeles for lying about his Harvard education and misappropriating at least $675,000 from investors. He lost between $30 million and $40 million after taking a risky short position against the U.S. economy. McDonald raised more money by selling equity in his company and disguising how the proceeds would be used. He has been considered a fugitive since November 2021 and was arrested at a residence in Port Orchard, Wash. McDonald appeared in court and remains jailed pending his transfer to Los Angeles [f3219893].