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OpEdNews Op Eds    H2'ed 12/3/20

NYSE's Reputation Suffers When Its Chairman Is Involved In Insider Trading

By       (Page 1 of 4 pages)   No comments, In Series: NYSE and Insider Trading
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What happens when the chairman of a publicly-traded corporation is accused of insider trading?

Even worse, what happens when this top executive is the chairman of the New York Stock Exchange, the symbol of American capitalism, and the world's best well-known stock exchange?

That's the huge problem facing the NYSE now and the exchange's response could devastate its credibility. This insider trading problem also raises serious questions related to investor confidence, corporate governance, politics, greed, regulated capitalism, and securities law, all in one place.

Even worse, it also raises problems about whether the corporate ownership of the NYSE will be less objective about self-investigation than when the NYSE was owned by its members.

Sprecher Case Raises Huge Corporate Governance Problems

This quagmire also makes it a huge corporate governance case study involving the world's top stock exchange and the huge corporation that owns it, the

publicly-traded Intercontinental Exchange (NYSE-ICE), whose chairman and CEO, Jeff Sprecher, was named in an insider trading scheme involving his wife, Georgia Republican Senator Kelly Loeffler. The Atlanta, Georgia couple is worth an estimated $500 million to $1 billion.

The stakes, personalities, and clash of money and political and executive power make this a great case study in how modern American corporate capitalism and self-regulation work at the highest levels.

Second, this situation raises questions about whether the US Justice Department, under Trump appointee Bill Barr, conducted a full and fair investigation.

Third, there is the issue of Sprecher's role as NYSE chairman. The NYSE is a designated self-regulatory organization (DSRO). This means it investigates itself and does not need SEC approval to conduct investigations of its listed companies and their top officers. Self-regulation works some of the time, but it is stressed beyond its limits when the people involved are the business' CEO and Chairman.

It's even more complicated because Loeffler is involved in a tight Senate race in Georgia that will determine whether the Democrats get control of the US Senate at the same time the Dems have control over the US House of Representatives and the Presidency.

This means the Republicans want this issue to die, while the Democrats, especially those involved in the Georgia Senate race, want to keep this important issue alive.

Is it all about crony capitalism or, is this a legitimate trading situation that gives insight into how very wealthy people manage their money?

(To see the details about the trading involved and how the trading discrepancies, see the article here on this site.)

The Insider Trading Escape Clause

The Loeffler-Sprecher insider trading case was dismissed because the power couple were covered by an SEC Rule

Both Sprecher and Loeffler have denied wrongdoing. The couple contends their stock sales were part of an SEC 10b5-1 plan and that they had no personal involvement in the actual individual trading decisions.

According to attorney Patrick Daugherty, senior SEC partner at the Chicago law firm of

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Chuck Epstein has held senior-level marketing communications positions at the New York Futures Exchange, Chicago Mercantile Exchange, Russell Investments, Principal Financial, Zacks Investment Research and Lind-Waldock. He is the author of (more...)

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