We all had to see this coming. The SEC has opened an insider trading investigation into Standard and Poors regarding the recent downgrade of the U.S. credit rating. On the Friday before the downgrade was announced, trading volume spiked and the Internet was rife with rumors of an impending downgrade, even here on WSO.
The SEC has asked for a list of S&P employees who were privy to the downgrade prior to the announcement. It was early in the day on that Friday when the rumors started flying around Twitter. A couple hours later it was being said that the rumors originated with BNP Paribas, of all places. If that proves to be true, and there was in fact a leak, that could have the makings of an international conspiracy.
I guess I wouldn't be surprised either way, mostly because nothing really surprises me in the market anymore. I suppose if you're an S&P employee and you happen to come into this kind of information, you might view it as the opportunity of a lifetime. It has to be tempting.
But I also wouldn't be surprised if there was no leak at all. I guess we shall see. The lesson to take away from it is to be plugged into all the various information sources available today if you're a trader. Twitter is quickly becoming the new Business Wire, and those who traded on the Twitter rumors of an after-market downgrade probably cleaned up.
Something to think about.
I would be extremely surprised if there was no leak. But I wouldn't be surprised if nothing comes of it in terms of prosecution.
Like you and Midas have both said many times Eddie, the SEC from time to time likes to do some PR look as if it's doing its job, and S&P is the bad guy of the month. I don't think they're going to find anything.
Told you what happens when you mess with the feds.
+1 for you and Magoo
This is the conversation I wish was on the news.
PR stunt. If the feds had been serious about icing the ratings agencies, it would have happened a couple years ago.
Will the rating change have any lasting effect? Doesn't look like its having much of an effect now (other than those crazy market swings last week)
http://www.bloomberg.com/news/2011-08-16/s-p-downgraded-in-treasury-trading-after-upgrading-communist-rule-in-china.html
SEC has nothing else to do this month
That downgrade was pointless (beyond pushing the market down and hindering righteous confidence in the US debt market). I'm glad they're being investigated. Even if they didn't do anything illegal, it'll still be annoying and unproductive for them.
There was absolutely a well disseminated leak the day of the US downgrade. Will be interesting to see if this actually results in any action...
Gotta love when a credit rating agency all of a sudden has a political agenda after they were shown their math skills suck!
Fucking retards.
Can someone explain why the US was so close to a default and retained a great rating yet greece is/was also on the verge of a default but i'm sure their credit rating is not very great? also, why can't greece raise their debt limit like the US did to avoid a default?
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