Can This Case Be Next, Please?

Now that the government has taken action against Goldman Sachs, maybe this case can be next? Stephen Friedman was Chair of the Federal Reserve Bank of New York as well as a Director at Goldman Sachs and made a killing on Goldman Sachs stock, while the NY Fed was involved in regulating the company, including the infamous AIG pass-through. And everyone knew it. Fed Had ‘Misgivings’ About Friedman’s Goldman Stock, Towns Says

The Oversight Committee will schedule a hearing “to learn more from Mr. Friedman and senior Fed officials about how he was permitted to make windfall profits by trading stock in a company he had a role in regulating,” the lawmakers said.

Background: New York Fed Chairman’s Ties to Goldman Raise Questions,

The Federal Reserve Bank of New York shaped Washington’s response to the financial crisis late last year, which buoyed Goldman Sachs Group Inc. and other Wall Street firms. Goldman received speedy approval to become a bank holding company in September and a $10 billion capital injection soon after.
During that time, the New York Fed’s chairman, Stephen Friedman, sat on Goldman’s board and had a large holding in Goldman stock, which because of Goldman’s new status as a bank holding company was a violation of Federal Reserve policy.
. . . Mr. Friedman also was overseeing the search for a new president of the New York Fed, an officer who has a critical role in setting monetary policy at the Federal Reserve. The choice was a former Goldman executive.
. . . Mr. Friedman, who once ran Goldman, says none of these events involved any conflicts. He says his job as chairman of the New York Fed isn’t a policy-making one, that he didn’t consider his purchases of more Goldman shares to conflict with Fed policy, and bought shares because they were very cheap.

He says he bought the shares because they were “very cheap.” I guess everyone involved with the entire stock market was wrong because that is how shares are priced. It’s called the “market price” which is the price, period, not too cheap, not too expensive. But this guy, who knew what moves the Fed was be making, knew something that no one else knew, and that is that they were too cheap. That is the very definition of insider trading and the very reason such things are considered a conflict of interest. And a crime.
See this, Friedmanism at the Fed,

… Stephen Friedman, the former chairman of the board of the New York Federal Reserve Bank and a member of the board of directors of Goldman Sachs. Through those two posts, Friedman may have had access to privileged information about the extent of Goldman’s exposure to AIG and the opportunity to profit from the Fed’s bailout of the beleaguered insurance giant. While he was serving on both boards, Friedman purchased 52,600 shares of Goldman stock, more than doubling the number of shares he owned. These purchases have since risen millions of dollars in value–and raised allegations of insider trading.
. . . Despite demands from Congress and the media, neither the Fed nor AIG disclosed the names of the banks or the amount of money each had received through the bailout until March 15, 2009, when AIG finally did so. While the public was left in the dark, Friedman nearly doubled his Goldman holdings by purchasing 37,300 shares for about $3 million. Friedman made that purchase on December 17, 2008, just over a month after the Fed decided to pay Goldman and the other banks full value for the insurance on mortgage-backed securities.

Insider trading is a criminal offense. The public deserves to know if that is what was going on here, and Mr. Friedman should be prosecuted if it was.