Secret Stress Test Results Create Opening for Insider Trading


A very interesting point from my CAP colleagues David Min and Joshua Picker who observe that the Obama administration’s decision not to publicly disclose the results of the “stress tests” has created huge potential opportunities for insider trading. This will be especially problematic since not only are the results of the tests unknown, but the public doesn’t know who has the results “or what proscriptions were placed on the communication of this information, other than that there was a ‘gag order’ against leaks to the press.”

Consequently, it’s hard to know who we should even be watching. At a minimum, this information needs to be forwarded to the SEC and to the TARP Inspector-General so that in the period between now and the May 4 release to the general public we can have some heightened scrutiny.