Yves Smith: S&P Broke Law in Leaking US Downgrade

Yves Smith at NakedCapitalism wrote that the S&P leaked information of the US downgrade prior to the public announcement to banking clients on Thursday and hedge funds on Tuesday with Twitter alight with the information Friday morning effectively allowing the banks and hedge funds to pre-trade on the information, which was not publicly released until after the market on last Friday (8/6/2011).  Such an act is specifically prohibited under SEC Rules.

I have been unable to find any other news coverage or discussion of this allegedly illegal conduct except, interestingly enough at Fox News in an article by Charlie Gasparino and a video of Gasparino on Fox News disclosing the leaks by S&P.  EconProph is the only other source commenting on this and extensively quoted from Yves Smith's article.

This only reinforces my previous questions as to whether S&P has a political agenda in combination with other major players in the financial sector.

Given the failure to bring prosecutions against the bankers and ratings agencies who provided us with toxic derivatives and deadly mortgage fraud as well globally risky trading activities --- all of which were profitable for those financial companies, including the ratings agencies, I am not going to hold my breath that Standard and Poor's will suffer from this allegedly illegal conduct as the financial sector is evidently too important and special to go to jail.  Jail is for people who protest social injustice.


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