As tensions in the Ukraine escalated, President Obama met with key financial executives.
Obama outlined the new era of modern warfare. This battle is waged using dollars and not bullets.
The President advised his audience of Wall Street professionals that he was going to call for significant sanctions against Russia in response to Putin’s aggressive actions in the Ukraine and Crimea.
By not permitting the Russian banks to conduct business with the U.S. and pressuring European corporations to choose between risk being cut off from U.S. trade if they do business with Russia, Putin will find himself isolated.
Sanctions would hurt Russian companies and force business leaders to put pressure on Putin to forsake his aggressive land-grab.
By alerting the bankers, they were able to take proactive financial move to avoid potential losses. For example, a trader could dump Russian bonds, or stocks in major Russian banks which would fall in value once sanctions are in place.
Although Obama may have done this naively and unwittingly, the results could be providing a certain class of investor material non-public information before anyone else.
Moreover, this is reminiscent of the Goldman Sachs – Government nexus during the financial crisis. At that time former Goldman CEO and then U.S. Secretary of the Treasury had private conversations with Goldman Executives. Was inside information released in those private conversations?
Naïve or not, if the government is going to prosecute individuals for insider trading, they should be sensitive themselves regarding the selective release of important material information.