U.S. Bank Regulator Acquired Bank Stock While Nomination Was Under Review -- Update
April 25 2018 - 2:56PM
Dow Jones News
By Ryan Tracy
WASHINGTON -- A senior U.S. financial regulator purchased bank
stocks while his nomination for the job was under review, financial
disclosures indicate.
Comptroller of the Currency Joseph Otting was confirmed for the
post in November and sold the stock in January, according to forms
he has filed with U.S. agencies including the Office of Government
Ethics.
In a financial disclosure signed by Mr. Otting on Feb. 20, 2018,
he lists the sale of stock in Wells Fargo & Co., Goldman Sachs
Group Inc., Morgan Stanley and KeyCorp., among other financial
firms. It isn't clear exactly when he purchased shares in those
companies. But financial disclosures dated March 2017 and released
after the White House nominated him for the job don't list stakes
in those banks.
The most recent disclosure, dated February 2018, is awaiting
certification by the Office of Government Ethics.
All of those banks have subsidiaries regulated by the
comptroller's office. Wells Fargo agreed to a major settlement with
the office last week related to misconduct at the huge bank.
A spokesman for Mr. Otting said Wednesday he "has met all of his
ethical obligations and remains committed to the highest ethical
standards."
Mr. Otting divested the stock after taking office in compliance
with ethics rules that are meant to guard against conflicts of
interest. Those rules didn't apply to him before he took
office.
The OCC spokesman also said Mr. Otting uses a professional money
manager and "has not made individual decisions regarding specific
stocks or securities for several years."
Mr. Otting valued the sale of the bank stock at between $15,000
and $50,000 for Goldman, Morgan Stanley, and Wells Fargo, and
between $1,000 and $15,000 for KeyCorp.
He also sold shares of insurer Prudential Financial Inc., valued
at between $1,000 and $15,000, according to the Feb. 20 document.
That position also wasn't listed in his financial disclosure from
March 2017.
As a member of the Financial Stability Oversight Council of
senior regulators, Mr. Otting has participated in discussions about
whether to remove federal oversight of Prudential. The OCC
spokesman said Mr. Otting didn't participate in those discussions
"until the divestitures were complete." The spokesman said the need
for a recusal went away at that point.
Mr. Otting is a career banker who over the years amassed large
holdings in financial stocks and other assets. The March 2017
financial disclosure valued his assets at more than $30
million.
After taking office on Nov. 27, Mr. Otting spent weeks recused
from policy decisions because he had not yet unwound his financial
holdings.
He was awaiting a certificate of divestiture allowing him to
sell financial holdings without facing an immediate tax bill, a
maneuver allowed under federal rules.
During that period, Mr. Otting had to amend the information he
submitted to ethic watchdogs, according to internal emails
disclosed in a Freedom of Information Act request.
Jennifer Dickey, an OCC ethics official, on Jan. 17 pressed
ethics watchdogs for an update on the status of Mr. Otting's
request for the certificate. "As I may have indicated before, this
situation is significantly impacting the OCC's ability to plan the
comptroller's calendar and the agency's activities," she wrote.
"As you know, this CD request has gone through many iterations
with each subsequent change requiring an updated review. The most
recent significant addition to the CD request came in on December
28," an OGE official wrote back, referring to the certificate of
divestiture.
Mr. Otting received the certificate on Jan. 19, and began
selling stock days later, the documents show.
The OCC said on Jan. 25 he was no longer recused from matters
affecting most institutions, though he is continuing to recuse
himself from matters affecting a handful of banks he has worked for
or with during his career.
Write to Ryan Tracy at ryan.tracy@wsj.com
(END) Dow Jones Newswires
April 25, 2018 14:41 ET (18:41 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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