This coming Saturday will mark the 16-month anniversary of former Wall Street Journal reporter Mike Derby setting off a media firestorm with his reporting that the then President of the Dallas Fed, Robert Kaplan, had “made multiple million-dollar-plus stock trades in 2020,” a year in which Kaplan was a voting member of the Fed’s Federal Open Market Committee (FOMC) with access to inside information.
While the trading scandal spread to numerous other Fed officials, including Fed Chairman Jerome Powell, the case against Kaplan seemed like a prime candidate for a criminal investigation by the U.S. Department of Justice.
Not only was Kaplan sitting on inside information gleaned from the Fed, but he was making market-moving statements himself on television.
When Wall Street On Parade obtained Kaplan’s trading records from the Dallas Fed shortly after Derby’s article appeared, it became clear that the stock trading was the least of the problem. Kaplan had also engaged in a far more brazen type of trading for a man sitting on inside information.
With the apparent approval of the then General Counsel/Ethics Officer of the Dallas Fed, Sharon Sweeney, who had signed her name to Kaplan’s trading records for years, Kaplan had repeatedly placed million-dollar-plus trades in S&P 500 futures and had been doing so for the entire five years he had been at the Dallas Fed. (See Kaplan’s financial disclosure forms from 2015 through 2020 here.)