Two prominent Democrats are asking a financial regulator to explain a possible conflict of interest in the industry he oversees.
Sen. Elizabeth Warren of Massachusetts and Rep. Elijah Cummings of Maryland wrote a letter to Commodity Futures Trading Commission Commissioner J. Christopher Giancarlo Friday asking him to explain potential conflicts of interest arising from his previous career in the industry he now regulators.
Warren and Cummings have teamed up recently on probes into the integrity of financial regulators, including a recent inquiry to the Federal Reserve about leaks from its monetary policy committee. Warren, a top critic of Wall Street practices, is a member of the Senate Banking Committee, and Cummings is the top Democrat on the House Oversight and Government Reform Committee.
Giancarlo holds one of the Republican-selected posts on the five-member commission, which oversees U.S. derivatives markets.
Before being appointed by President Obama in summer 2013, Giancarlo had a career in the financial services industry and at the time was an executive vice president at the brokerage firm GFI Group Inc.
Giancarlo was confirmed by the Senate in June 2014, and soon afterward received a $2.15 million severance payment and divested his stock in the company.
Warren and Cummings raise concerns about the timing of stock sale. They note Giancarlo deviated from his stated plans for divesting stock and instead sold the stock on three days during which GFI shares reached five-year highs.
Furthermore, they said companies under the commission’s jurisdiction bid up the price of the GFI stock before Giancarlo sold his shares, netting him more than $100,000 in profits than he would have gained otherwise.
“It is critical that the CFTC commissioners and staff avoid conflicts of interest or the appearance of conflicts of interest,” the lawmakers wrote, asking Giancarlo to provide materials relating to his divestiture plans and an explanation of how he will manage commission actions that would affect the companies whose bidding war over the company drove up the stock price and benefited him.
