NY Fed Chairman's Insider Trading

Investopedia defines insider trading
What Does Insider Trading Mean?
The buying or selling of a security by someone who has access to material, nonpublic information about the security.

Investopedia explains Insider Trading
Insider trading can be illegal or legal depending on when the insider makes the trade: it is illegal when the material information is still nonpublic--trading while having special knowledge is unfair to other investors who don't have access to such knowledge.

"it is illegal when the material information is still nonpublic"

The SEC's definition of insider trading.



During the time the Federal Reserve was bailing out financial institutions and allowing companies such as Goldman Sachs to become banks, the Federal Reserve of course had responsibility to regulate those banks.

Stephen Friedman was and is the New York Federal Reserve's Chairman and sat on Goldman Sach's board of directors AT THE SAME TIME. There is an apparent conflict of interest when the regulator works for the bank that is being regulated. Stephen Friedman would not only have access to material non-public information from both the Federal Reserve and Goldman Sachs, he would also have conflicting obligations to work for the regulator and the regulated bank.
During this time (December 2008), Stephen Friedman purchased 37,300 shares of Goldman Sachs stock according to the same Wall Street Journal article.

Stephen Friedman worked for the regulator, he worked for the regulated bank, he was in posession of material non-public information about banking bailouts, and he purchased 37,300 shares of Goldman Sachs which have risen $1.7M in value (according to same Wall Street Journal article).

Will Stephen Friedman be investigated for insider trading, convicted, forced to disgorge the ill-gotten gains, stripped of his jobs, and sent to prison?



Stephen Friedman's purchase of 37,300 shares of Goldman Sachs in December 2008 in SEC database. "purchase of 37,300 shares of the Issuer's common stock by the Reporting Person at an average weighted purchase price of $80.7792 per share"

The current price of Goldman Sachs stock is 134.16.

134.16 - 80.7792 = 53.3808.
53.3808 * 37,300 = $1,991,103.84 of ill-gotten gains from insider trading by Stephen Friedman.


Where is the outrage?

What can an average citizen do?


An average citizen can file a complaint with the SEC online or via email to enforcement@sec.gov. An average citizen can even apply for a bounty from the SEC.