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Commentary by Steven Lofchie

An administrative law judge dismissed an insider trading case brought by the SEC against a trader at an investment bank. The case examined the personal benefit prong of the "misappropriation theory". The inside information was provided by a research analyst at the bank and concerned an imminent change in the rating of a security. Administrative Law Judge Jason S. Patil concluded that the SEC Division of Enforcement failed to meet its burden of proof in attempting to show that the insider tip was offered in exchange for a personal benefit and that, given the absence of proof of personal benefit

The Senate Homeland Security and Governmental Affairs Committee's Permanent Subcommittee on Investigations scheduled a two-day hearing, titled "Wall Street Bank Involvement with Physical Commodities," to be held on November 20 and November 21, 2014. According to its release, the Subcommittee plans to examine the extent to which banks and their holding companies own physical commodities, such as oil, natural gas, aluminum and other industrial metals, as well as own or control businesses, such as power plants, oil and gas pipelines, and commodity warehouses. Subcommittee Chair Carl Levin (D-MI)

The Senate Banking Subcommittee on Financial Institutions and Consumer Protection held a hearing entitled "Regulating Financial Holding Companies and Physical Commodities." The following witnesses testified: Mr. Norman Bay, Director of the Office of Enforcement, Federal Energy Regulatory Commission Mr. Vince McGonagle, Director of the Division of Market Oversight, Commodity Futures Trading Commission Mr. Michael Gibson, Director of the Division of Banking Supervision and Regulation, Board of Governors of the Federal Reserve System. Click here for a summary of the hearing by Delta Strategy