President-elect Donald Trump is scheduled to visit the New York Stock Exchange today, the symbol of American capitalism, where some of his biggest donors will greet him.
It’s not clear why he is visiting the NYSE. Still, perhaps he will meet with NYSE execs to discuss how he will loosen trading and consumer protection regulations, which are all part of Trump’s plans to deregulate everything so that the foxes will manage the henhouse on a multi-billion dollar scale.
Trump’s visit will also feature Jeff Sprecher, the chairman of the New York Stock Exchange and CEO of the Intercontinental Exchange (ICE), which owns the NYSE, and his wife, Kelly Loeffler, the ex-Senator from Georgia, who will greet him.
But all the parties here will be on a first-name basis.
The Sprecher-Poeffler team donated over $3.2 million to the Trump campaign. The Atlanta, Georgia, couple is worth an estimated $500 million to $1 billion. As one of his biggest donors, Trump has named Loeffler as his choice to lead the Small Business Administration. Earlier, Trump considered her to be the Secretary of the Department of Agriculture, but that nomination was withdrawn when it became apparent that Loeffler didn’t seem to know much about driving a tractor, crop management, or feeding cattle. The closest Loeffler ever came to a farm was when she ate at a salary bar.
It’s also logical that the Loeffler-Sprecher team has close ties to Trump since they have a lot in common.
First, Kelly was an unindicted co-conspirator in the Trump scheme to steal votes in Georgia while participating in a fake elector scheme for the 2020 election.
Loeffler, a short-term Senator from Georgia, got her “get out of jail free card” after the special grand jury in Fulton County, Georgia, recommended charges against her, Republican Sen. Lindsey Graham of South Carolina, and former GOP Sens. David Perdue, according to the special counsel grand jury report released Sept. 8, 2023. But, Fulton County District Attorney Fani Willis did not charge the lawmakers when she returned an indictment last month against former President Donald Trump and 18 co-defendants in that sprawling vote-fixing racketeering case.
Second, Sprecher, age 69, and Loeffler were also involved in an insider trading scandal in 2020. At that time, Loeffler, who was then a senator, was accused of trading on information she received in a confidential briefing about the impact of the COVID-19 virus. She and her financial advisors then sold stocks that the virus would hurt. After an investigation, Loeffler and Sprecher were not charged in the insider trading case. At about this same time, Loeffler made a $1 million donation to Trump.
The Insider Trading Escape Clause
The Loeffler-Sprecher insider trading case was dismissed because an SEC Rule covered the power couple. It also helps that they are major Republican donors. Loeffler also is a die-hard Trump supporter who cannot admit that Biden won the election. See her deny it repeatedly in this video.
Both Sprecher and Loeffler have denied wrongdoing. The couple contends that their stock sales were part of an SEC 10b5-1 plan and that they had no personal involvement in individual trading decisions.
According to attorney Patrick Daugherty, senior SEC partner at the Chicago law firm of
Foley & Lardner LLP, this SEC Rule says that “if you are a corporate insider, you can enter into a plan that will allow for shares to be sold at stated intervals in dollar amounts, according to an algorithm with the trades done in a certain way. This means the corporate executives take themselves out of timing decisions about when to buy or sell. They give control to an outside advisor or brokerage firm that is not communicating with them.
“If you do it the right way, the trades can get done even when the executive is in charge of material non-public information, so they can say the buy or sell plan was set up in advance and did not rely on any trading information that was provided by the executive,” Daugherty said.
This is not the first time Rule 10b5-1 has been scrutinized. The outgoing SEC Chairman, Jay Clayton, said it needs to be reformed.
In a CNBC interview in November 2020, outgoing SEC Chairman Jay Clayton cited problems with the 10b5-1 trading rule, which can look too much like insider trading.
In the interview, he advocated a “cooling off period” of up to six months when company executives could sell shares using a pre-arranged, blind trading plan when he appeared before a Senate hearing. If this happened, Clayton said it would “give people greater confidence that you haven’t tried to time the market.” He called it part of “good corporate hygiene” to eliminate the appearance of impropriety, an issue that is very obvious in the Sprecher-Loeffler insider trading case.
Loeffler met Sprecher when she worked at the ICE, where she was senior vice president of corporate communications, marketing, and investor relations. Sprecher, who is 15 years older than Loeffler, married her in 2004. Based on their history, both love money and power and are not accountable to their shareholders or constituents. According to Bloomberg, the couple’s estimated net worth is $1 billion.
Sprecher and Loeffler: For Love and Money
As the symbol of American capitalism, the NYSE (NYSE-ICE) once had the highest fiduciary and investor protection standards in the financial industry. Still, those standards are in the gutter with Sprecher as CEO.
Just a decade ago, even the appearance of financial impropriety for any NYSE employee, including insider trading, preferential treatment of specialist firms, financial fraud, or inappropriate public conduct after business hours, was enough to get an NYSE employee fired, let alone the CEO.
The NYSE has only been involved in a few financial acts of impropriety in its history. The first was in 1933 when NYSE chairman Richard Whitney was involved in an embezzlement scandal. Whitney was president of the New York Stock Exchange from 1930 to 1935. He was convicted of embezzlement and imprisoned at Sing Sing for five to 10 years. As a show of public condemnation and interest in this NYSE scandal, “on April 12, 1938, 6,000 people turned up at Grand Central Terminal to watch as a scion of the Wall Street Establishment was escorted in handcuffs by armed guards onto a train that delivered him to prison.”
It’s a sad commentary today that people in 1938 had a better sense of financial impropriety than they do today, where people seem resolved to lower standards of fiduciary and CEO conduct.
The second scandal was in 2004 when NYSE Chairman Richard Grasso was accused of violating New York’s Not-for-Profit Corporation Law and misleading its board of directors by awarding an excessive compensation package of $187 million. Grasso worked with the senior vice president of NYSE personnel, Frank Ashen, to present misleading documents regarding the exit pay package to the NYSE board. Ashen served time for his complicity in the deception.
The NYSE is a Designated Self-Regulating Organization (DSRO) that can investigate and punish member firms, listed companies, and top executives without SEC approval. As a publicly traded company now owned by ICE, the NYSE must comply with the same standards it applies to its listed companies, but instead, it ignores or applies a double standard regarding the NYSE Chairman.
After the insider trading charges were made and dropped against Sprecher-Loeffler, the NYSE trustees buried their heads in the sand to protect Sprecher and their cushy trustee jobs, which can reach $300,000 to $500,000 per year for attending board meetings and retreats to discuss the future of the financial world. It’s no wonder that given this amount of money for doing very little breeds extreme loyalty and a full-blown revisit of “the Emperor has no clothes” attitude. The listed companies on the NYSE were also complicit since they could force Sprecher to resign over the insider trading event but apparently took no public action.
As this article points out, the insider trading charges against Sprecher raised issues about conflicts of interest, self-dealing, and professional impropriety. All this damaged the reputation of the nation’s public company marketplace and its listed companies. NYSE-listed companies that value transparency and corporate governance should be very concerned when their shares trade on an exchange that tolerates insider trading. But they did nothing to take action about the charges.
Since the NYSE was founded in 1792, insider trading has been a perennial and severe charge for the exchange’s Compliance Department. However, the Compliance Department must have looked the other way when Sprecher was charged.
The NYSE Violated its Own Rules in the Insider Trading Case
The NYSE is a Designated Self-Regulatory Organization (DSRO) and can investigate and punish member firms and their top executives without SEC approval. As a publicly traded company now owned by ICE, the NYSE must comply with the same standards it applies to its own listed companies.
According to the exchange’s own rules, Sprecher violated the following:
- NYSE Rule 2010. Standards of Commercial Honor and Principles of Trade; and,
- NYSE Rule 303A.10 Code of Business Conduct and Ethics, including its conflict-of-interest provisions and insider trading rules, says explicitly, “The listed company should proactively promote compliance with laws, rules, and regulations, including insider trading laws. Insider trading is unethical and illegal and should be dealt with decisively.”
As Trump sycophants and large donors, Sprecher and Loeffler should be on the radar screens of public companies listed on the NYSE, the media, and voters. Repeat offenders are welcome in Trump’s social and business circles.
History will repeat itself under Trump, who is pushing for less regulation and zero personal accountability for all his appointments. This will benefit Loeffler and Sprecher, who are all unrepentant repeat offenders.
During his visit today, Trump will probably confirm that the looting can begin as soon as he takes office. He will appoint a compliant new SEC chairman who will look the other way when white-shoe trading, investment, private equity, and hedge fund firms conjure their financial engineering to fleece average investors and the federal government out of hundreds of billions.
As Trump has said since he was elected, “If I got away with it, so can you.”
