Warren, Cummings eye CFTC official on conflicts of interest

A pair of Democratic lawmakers are asking if a financial regulator improperly profited when he exited the private sector for government work.

The pair is asking a Republican commissioner of the Commodity Futures Trading Commission for details regarding his transition from a private financial firm to the derivatives regulator. Specifically, they are questioning the timing of his sale of company stock, which happened to come when it was trading at an all-time high.

{mosads}Sen. Elizabeth Warren (D-Mass.) and Rep. Elijah Cummings (D-Md.) sent a letter to CFTC Commissioner J. Christopher Giancarlo, asking for details regarding his exit from the firm GFI Group, Inc.

Confirmed by the Senate to join the regulator in June, Giancarlo received a $2.15 million severance package from the firm, as he headed to the government. In addition, he sold off 60,000 shares of company stock.

However, while the plan was to sell off the shares over an extended period of time after joining the regulator, they were instead sold off over a three-day stretch, following a “mistake in the design of the trading plan.”

That bulk September sale of stock came at a time when GFI was the target of a bidding war between two major brokerage companies — CME Group and BGC Partners. The company’s stock value doubled from July to September, and five of the seven tranches of Giancarlo’s stock were sold during that time frame, according to the letter.

All told, Warren and Cummings estimate Giancarlo may have made an additional $100,000 for selling the stock at that time. The pair is also wondering how Giancarlo will handle any CFTC work that involves CME or BGC.

They are asking for several details about Giancarlo’s work arrangement with GFI, other documents, as well as “an explanation for what steps you have taken to avoid any conflict of interest or the appearance of a conflict of interest” while at the CFTC.

In a previous statement, Giancarlo said he was fully compliant with all ethical requirements.

“Throughout my tenure at the CFTC, I have and will continue to listen carefully to the advice of CFTC ethics staff to ensure that I fully comply with all regulations governing my transition from the private sector to public service,” he said in a statement to Bloomberg.