January, 19 2011, 09:13am EDT
For Immediate Release
Contact:
Jordan Libowitz,,jlibowitz@citizensforethics.org,.
CREW Demands Investigation into Wall Street Investors' Manipulation of Education Regulations for Financial Gain
WASHINGTON
Documents uncovered by Citizens for Responsibility and Ethics in
Washington (CREW) through a lawsuit against the Department of Education
show that Wall Street investors have been working with high-ranking
Education officials to craft regulations, allowing them to net millions
of dollars through the short sale of for-profit college stocks. Even
more disturbing, these newly discovered records reveal senior Education
officials knew these investors - with no policy expertise - were pushing
regulations for their own personal financial gain, but continued to
work with them anyway.
As a result, CREW has asked Education Secretary Arne Duncan to
investigate the improper role hedge fund managers and outside interest
groups played in Education's formulation of highly contentious
regulations governing the for-profit education industry. "Education
officials allowed Wall Street investors to insinuate themselves into the
regulatory process knowing full well their main goal was to manipulate
stock prices to make money," said CREW Executive Director Melanie
Sloan. "Under these circumstances, how can Americans have any real
confidence that the resulting regulations are really in their best
interests, not just Wall Street's?"
Tipped off by well-known short-seller Steven Eisman's testimony
regarding for-profit colleges last June before a Senate committee, CREW
sought emails and other records regarding interactions between Education
officials and Wall Street investors, including Mr. Eisman. Education
initially stonewalled, forcing CREW to sue for the documents.
Ultimately, Education provided thousands of pages of material revealing
the depth of involvement of Wall Street investors in crafting
regulations.
"While certainly, there is reason to be skeptical of regulations
crafted by Wall Street investors with no policy expertise working
arm-in-arm with federal officials, the bigger question is where else is
this happening?" Ms. Sloan said. "Logic dictates Mr. Eisman is not the
only investor to manipulate agency processes for his own financial
benefit. Americans deserve to know whether Wall Street investors have
pushed regulatory changes at other federal agencies in order to impact
stock prices and make money."
Click here to read CREW's letter to Education Secretary Arne Duncan.
Click here to see CREW's exhibits included with the letter.
Click here to see CREW's original FOIA request to the Department of Education.
Citizens for Responsibility and Ethics in Washington (CREW) is a nonprofit 501(c)(3) organization dedicated to promoting ethics and accountability in government and public life by targeting government officials -- regardless of party affiliation -- who sacrifice the common good to special interests. CREW advances its mission using a combination of research, litigation and media outreach.
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