Tester keeps SEC Chairman in hot seat
Chairman says he will update Senator on insider trading investigation
(WASHINGTON, D.C.) – The Chairman of the Securities and Exchange Commission (SEC) today said he will personally update Senator Jon Tester in a private meeting on an investigation into possible illegal trading and the role it may have played in the collapse of Bear Stearns.
Tester asked SEC Chairman Christopher Cox and U.S. Attorney General Michael Mukasey for an investigation earlier this month. Tester made the request after learning that volume trading in Bear Stearns shares jumped dramatically just before the investment bank collapsed in mid-March. The U.S. Treasury and the Federal Reserve Board agreed to risk nearly $30 billion in taxpayer dollars to bail out Bear Stearns, allowing it to be sold to rival JP Morgan Chase.
On March 14 — just days before the sale — shares of Bear Stearns were traded nearly 187 million times. Last year the record high for Bear Stearns shares traded in one day last year was 28 million.
"It just doesn't pass the smell test, and we need to know about the possibility of any illegal, insider trading," Tester said.
During a Senate Banking Committee hearing today in Washington, Tester told Cox he's still waiting for a response to his investigation request.
"I am not standing here to criticize the Federal Reserve Bank for their actions, if risking nearly $30 billion of taxpayers' dollars with a limited amount of due diligence was necessary," Tester told Cox today. "But I want to know if it could have been avoided."
Cox responded by saying the troubling aspects of the Bear Stearns deal were too big to miss and said he will update Tester in person in the coming days.
Tester has criticized the Bear Stearns bailout because it was done without oversight. Last week he told Fed Chairman Ben Bernanke that many Montanans are troubled by the decision to spend nearly $30 billion to bail out a Wall Street bank while they're struggling to pay for gas, groceries and medical bills.