Latest Obama Adminstration Scandal: HHS Employees & Insider Trading


It's Monday and you know what that means. We have a new scandal to address. No one will be surprised. This is the new current reality of living in the land of the free and the home of the brave.

It seems that hundreds of Department of Health and Human Services employees had access to information about a Medicare decision, at least 436 employees to be exact, that could have been very useful in advance of a huge trading spike which was the result of the announcement.

The Washington Post is breaking this story today:

Hundreds of federal employees were given advance word of a Medicare decision worth billions of dollars to private insurers in the weeks before the official announcement, a period when trading in the shares of those firms spiked. The surge of trading in Humana's and other private health insurers' stock before the April 1 announcement already has prompted the Justice Department and the Securities and Exchange Commission to investigate whether Wall Street investors had advance access to inside information about the then-confidential Medicare funding plan.

Sen. Charles E. Grassley (R-Iowa) told The Washington Post late last week that his office reviewed the e-mail records of employees at the Department of Health and Human Services and found that 436 of them had early access to the Medicare decision as much as two weeks before it was made public. The number of federal employees with advance knowledge is surely higher; the figures Grassley's staff compiled did not include people at the White House's Office of Management and Budget who also saw the information. The e-mail records of those employees have not been made available to Grassley. The discovery that sensitive information was so widely disseminated could complicate the forensic task for investigators trying to determine who may have leaked confidential information, and it brings further attention to the government's handling of policy details valued by Wall Street traders. "This should sound an alarm," Grassley said. "It should result in better controls to avoid unfair access to information that the average investor could never tap."

It is important to note that being in early receipt of the information does not make one a criminal. It's how the information is used. But if out of 436 government employees, and their associates, you don't think at least 1 person used this information for personal gain then you simply have not been paying attention.

I'd be surprised if there were not several people who used this for personal gain, at least to the extent that they bought a few extra shares of Humana or Aetna. Even a small purchase of shares based on insider information is unethical. 10 shares may not get you prosecuted but that does not discount the fact that it is wrong and still illegal.

This just in… our government tends to be a little on the corrupt side and it's not just Obama. As long as there are carrots to be dangled you will always find rabbits. This is one of the sins of big government. It's just too many hands in the cookie jar at all times and it does not work.

Also out early on this story is Hotair which is starting to assemble the pieces and explains how the information could have potentially been used:

A brokerage firm in D.C. announced late in the trading day on April 1 that a decision to boost funding for Medicare Advantage was forthcoming. Shares of Humana and Aetna skyrocketed. Later that day, after the markets had closed, the feds confirmed that, indeed, another $8 billion would be plowed into the program. So who at HHS blabbed? Maybe no one: Per WaPo and this WSJ report from a few weeks ago, the feds seem to be interested in a lobbyist who — ta da — used to work as a health-care policy advisor to Chuck Grassley himself and who now specializes in "political intelligence." (He also had a "role" in writing ObamaCare, per the WSJ, and used to work on health-care legislation with someone who's now a "senior official" at CMS, the division of HHS that made the decision on increasing funding for Medicare Advantage.) The SEC knows he was communicating with at least one current staffer in Grassley's office; the question is whether that staffer slipped the information on the Medicare decision to the lobbyist or whether the lobbyist somehow "guessed" that Medicare funding would be increased based on tidbits of info he gleaned from various sources on the Hill. Even if it's the latter, with no one having directly fed him confidential information, the surge in Humana/Aetna shares based on his analysis is a direct result of his access to government's major players. When a former Grassley advisor and colleague of a bigwig at CMS tells you that he thinks a windfall's coming, you listen. Big government takes care of its alumni.

For the record it was not just Humana and Aetna that surged on this news. An April 2nd CNN Money report states that, " Shares of Humana (HUM), United Health Group (UNH), Aetna (AET), Cigna (CI), and WellPoint (WLP) rose between 4% and 8% Tuesday. Humana, which has the greatest exposure to Medicare Advantage, jumped nearly 10% at one point."

Do not underestimate a 4% single gain as small. For most of us who have little investment capital it seems minor. At a 4% daily gain you would be able to double your money every 18 trading days. Many of us would be overjoyed to average a 4% yearly gain which allows our money to double every 18 years. See the difference?

In a former life I was somewhat of a "Yuppy" (Young Upward Professional) and I understand the value of the information that was leaked. Now we just have to figure out who used it to their advantage.

So there we have it. Another day. Another potential scandal is brewing.

The world continues to laugh at us and we are so divided as a people that it is going to be difficult to do anything about it.

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Comments

comments

  • DockyWocky

    Another day and we have a new Obama administration scandal to address. As Gomer Pyle used to say: "Surprise, surprise!" This is the
    new current reality of living in the land of the free and the home of
    the conned.

    If there is money involved, you van be sure that the Imperial Family is sticking it's grubby paws into the action. First to the public trough, first to grab a healthy share for "the kids, you know."

  • zagozana

    The real powers are involved with this stuff...

    They are extra-governmental and out of its control...

    Currency Markets Are Rigged

    Posted: 12 Jun 2013 10:30 PM PDT
    EVERY Market Is Rigged

    Bloomberg reports today:

    Traders at some of the world’s biggest banks manipulated
    benchmark foreign-exchange rates used to set the value of trillions of
    dollars of investments, according to five dealers with knowledge of the
    practice.

    Employees have been front-running client orders and rigging WM/Reuters rates
    by pushing through trades before and during the 60-second windows when
    the benchmarks are set, said the current and former traders, who
    requested anonymity because the practice is controversial. Dealers
    colluded with counterparts to boost chances of moving the rates, said
    two of the people, who worked in the industry for a total of more than
    20 years.

    The behavior occurred daily in the spot foreign-exchange market and
    has been going on for at least a decade, affecting the value of funds
    and derivatives, the two traders said.

    ***

    The $4.7-trillion-a-day currency market, the biggest in the financial system,
    is one of the least regulated. The inherent conflict banks face between
    executing client orders and profiting from their own trades is
    exacerbated because most currency trading takes place away from
    exchanges.

    ***

    While the rates aren’t followed by most investors, even small movements can affect the value of what Morningstar Inc. (MORN) estimates is $3.6 trillion in funds including pension and savings accounts that track global indexes.

    ***

    As market-makers, banks execute orders to buy and sell for clients as well as trade on their own accounts.

    ***

    By concentrating orders in the moments before and during the
    60-second window, traders can push the rate up or down, a process known
    as “banging the close,” four dealers said.

    Three said that when they received a large order they would adjust
    their own positions knowing that their client’s trade could move the
    market. If they didn’t do so, they said, they risked losing money for
    their banks.

    One trader with more than a decade of experience said that if he
    received an order at 3:30 p.m. to sell 1 billion euros ($1.3 billion) in
    exchange for Swiss francs at the 4 p.m. fix, he would have two
    objectives: to sell his own euros at the highest price and also to move
    the rate lower so that at 4 p.m. he could buy the currency from his
    client at a lower price.

    He would profit from the difference between the reference rate
    and the higher price at which he sold his own euros, he said. A move in
    the benchmark of 2 basis points, or 0.02 percent, would be worth
    200,000 francs ($216,000), he said.

    ***

    To maximize profit, dealers would buy or sell client orders in
    installments during the 60-second window to exert the most pressure
    possible on the published rate, three traders said. Because the
    benchmark is based on the median of transactions during the period,
    placing a number of smaller trades could have a greater impact than one
    big deal, one dealer said.

    Traders would share details of orders with brokers and counterparts
    at banks through instant messages to align their strategies, two of them
    said. They also would seek to glean information about impending trades
    to improve their chances of getting the desired move in the benchmark,
    they said.
    Interest Rates Are Manipulated

    Unless you live under a rock, you know about the Libor scandal.

    For those just now emerging from a coma, here’s a recap:

    The big banks have conspired for years to rig interest rates … upon which $800 trillion in assets are pegged

    This was the largest insider trading scandal ever … and the largest financial scam in world history

    Local governments got ripped off bigtime by the Libor manipulation

    Libor is still being manipulated
    Derivatives Are Manipulated

    The big banks have long manipulated derivatives … a $1,200 Trillion Dollar market.

    Indeed, many trillions of dollars of derivatives are being manipulated in the exact same same way that interest rates are fixed: through gamed self-reporting.
    Commodities Are Manipulated

    The big and and government agencies have been conspiring to manipulate commodities prices for decades.
    Gold and Silver Are Manipulated

    The Guardian and Telegraph report that gold and silver prices are
    “fixed” in the same way as interest rates and derivatives – in daily conference calls by the powers-that-be.
    Oil Prices Are Manipulated

    Oil prices are manipulated as well.
    Everything Can Be Manipulated through High-Frequency Trading

    Traders with high-tech computers can manipulate stocks, bonds, options, currencies and commodities. And see this.
    Manipulating Numerous Markets In Myriad Ways

    The big banks and other giants manipulate numerous markets in myriad ways, for example:

    Engaging in mafia-style big-rigging fraud against local governments. See this, this and this

    Shaving money off of virtually every pension transaction they
    handled over the course of decades, stealing collectively billions of
    dollars from pensions worldwide. Details here, here, here, here, here, here, here, here, here, here, here and here

    Charging “storage fees” to store gold bullion … without even buying or storing any gold . And raiding allocated gold accounts

    Committing massive and pervasive fraud both when they initiated mortgage loans and when they foreclosed on them (and see this)

    Pledging the same mortgage multiple times to different buyers. See this, this, this, this and this. This would be like selling your car, and collecting money from 10 different buyers for the same car

    Cheating homeowners by gaming laws meant to protect people from unfair foreclosure

    Pushing investments which they knew were terrible, and then betting
    against the same investments to make money for themselves. See this, this, this, this and this

    Engaging in unlawful “frontrunning” to manipulate markets. See this, this, this, this, this and this

    Engaging in unlawful “Wash Trades” to manipulate asset prices. See this, this and this

    Otherwise manipulating markets. And see this

    Participating in various Ponzi schemes. See this, this and this

    Charging veterans unlawful mortgage fees

    Cooking their books (and see this)

  • Troy Walton

    insecurity and free change commission and the injustice department. I would not expect anything less from my hard earned tax dollars. It will never be enforced. The Health and Human Self Servers will get to keep their ill gotten gains.

  • onooop

    politicians and government workers have more money than they get paid! maybe they should all be investigated by the NSA and frisked by the TSA and locked up in FEMA camps!

  • Shagnasty1

    Just who do these people think they are, Congressmen? Didn't they know insider trading is the exclusive right of Congress? I believe the HHS is another alphabet government agency that needs to go.

  • randydutton

    Most telling is that Humana's stock rose significantly from a low point two weeks earlier (about Mar 15th, the time when HHS employees found out). Go to http://money.cnn.com/quote/quote.html?symb=HUM and look at the 3-month chart.

  • AnnaGraceS

    Oh God this is so tiresome and nothing ever ever ever gets done about all these scandals!! obozo and his administration is the most corrupt in the history of the United States. These congressmen become super wealthy because there is no term limits that they can stay and rob the tax payers!!

  • R.Young

    When you work for the Feral Government there is no such thing as insider trading, the politically correct term is Knowledge of the Future!

  • 57girl

    Didn't Pelosi just get smacked down for insider trading? We need to start giving some of these ( I think I'm above the law) law breakers some time in jail and make examples out of them. Insider trading is illegal. Why is it again, that our government employee think they are exempt from the rules?

  • mthammer

    Here we go again , federal employees taking advantage of the government and taxpayers using the money we pay them to make more on Government corruption , now involving the stock market. The next oversite committee scandal will involve sebellious and she will deny everything also and put on administrative leave with pay. We are a Police State People wake up , we need a military takeover .

  • Hotnike

    Will this crap ever end? Actually, I hope not. The more crap that hits the fan the better the chance of this dumbed-down electorate will wise up.

    • Clint

      We can hope Mike, we can hope.

    • CainCan

      Notice how they say the scandals come once a week - sadly, it's more like, once a DAY. How can they not keep coming now that even the libs are starting to sour on this administration? The floodgates are wide open!

  • http://www.facebook.com/kenneth.bowman.773 Kenneth Bowman

    Obama is a TYRANT in complete CONTROL no matter what sophistic arguments that are made to deny his involvement. To claim Obama knows NOTHING is ABSURD!

    Like Adolph Hitler no links to the Death Camps were ever made known. Yet everybody knows Hitler authorized and endorsed them.

    Obama is in the image of Hitler in EVIL.

    • AwakenedAngryAmerican

      He had to know. Why else did he overturn the anti-insider trading disclosure for Congress a year after making a big deal about creating it in the first place.
      Also. The NSA would have known all. As would the Justice Department. Let's see where they put their money those days.

  • stevor

    This proves that o'bama has NO CONTROL. Is it that he doesn't care or that he's considered a joke and not worthy of respect? (or both)

    • Clint

      Plausible deniability, nothing more or less.

  • Jude O'Connor

    Martha Stewart did time in prison for inside trading but the double standard in the government keeps the criminals in office. How can the judges deny their blindness to the law at times?

    • Canadianlady

      Her securities fraud charge, the more serious one, was dismissed. She was convicted of conspiracy, obstruction of justice, and two counts of making false statements to a federal investigator. Basically she went to prison for lying. The advantage she got through her insider trading was less than $50,000. To a billionaire, like Martha Stewart, that's chump change.

      Then you look at Holder, 0bama, Clapper, Learner, Clinton, and all the others who have brazenly lied to Congress, who are getting away with it. What a double standard they've set up to their advantage. How enriching it is to be a member of Congress today.

    • A. Levy

      Now you know why politicians will spend $30-40-60 million dollars to get a job that pays about $180K per year.

      BTW, Stewart is (not) a billionaire. She is a multimillionaire. And walk away from $50K? I've never met anyone who had enough money. Have you?

    • Canadianlady

      Oh, I know full well the riches that come of being a Washington politician. They are the proverbial pigs who feed at the public trough. Corruption exists at the upper echelons of all enterprises, because money corrupts, and big money corrupts in a big way. Stewart's net worth, before she was incarcerated, was estimated to be about a billion dollars. She's not as wealthy now because of the poor economy.

    • 57girl

      I'll trade bank accounts with Martha Steward any day of the week. She might not be as rich as she once was, but she is a lot richer, than I'll ever be, I have no doubt of that. LOL.

    • Canadianlady

      LOL! Me too!

    • Carl E Olson Jr

      Looks like another on line romance for you CL!

    • 57girl

      Term limits would solve a lot of problems. So would relieving our 'elected Representatives of their cushy pensions, then sticking them with the same social security pensions,the rest of us get. Maybe if they participated in the same programs, they dream us for the rest of us, our Representatives would fix the damned things.

    • Canadianlady

      I hear they've gutted the anti-insider trading bill. If they'd ever get honest about eliminating insider trading by congressmen, you wouldn't see paupers become mega millionaires during their stint in Congress.

    • above god

      Case In Point. My Sen. Tom Harkin Enters Congress W/O A Pot To Piss In Leaves Worth 17 Millilon & A Million $ house In Bremuda. A Poor Democrat!

    • Canadianlady

      Washington bureaucrats are either the luckiest people on earth or they're criminals. ;)