September 21, 2021

Law enforcement authorities may already be investigating who profited from advanced notice of a VA announcement that moved the markets. If not, why aren’t they?

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According to whistleblower contacts with Congress, executive branch authorities, and Empower Oversight—as well as public reports and documents—inside information about a controversial announcement by the Veterans Administration (VA) on March 9th, 2020, appears to have leaked in advance to select groups before the general public.

The announcement included market-moving information that veterans would lose access to their G.I. Bill benefits at certain for-profit schools. Because some of the schools were operated by publicly traded companies with substantial veteran student enrollments, anyone with advanced knowledge of the VA announcement could have profited handsomely at the expense of average investors by trading on that information before the news became public.  During the relevant period, one company lost 58%, or $800 million, of its market capitalization, before the VA decided to reverse its initial announcement.

In addition to news reports, the controversy has been the subject of a federal FOIA lawsuit, congressional oversight letters to the VAVA Inspector General, and the Securities and Exchange Commission (SEC), and an Empower Oversight FOIA request. Empower Oversight’s analysis of these circumstances suggests that further investigation by the proper authorities is necessary to:

  1. confirm whether the VA’s selective release of information enabled insider trading;
  2. hold accountable any officials who improperly released information early; and
  3. improve the VA’s procedures for handling market moving information to ensure fair and equal access for all investors.

This research summarizes the factual record on this controversy, relevant information from whistleblower contacts, and analysis supporting the opinion that further inquiry is necessary.