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Whistleblower group seeks probe into whether VA announcement leaked to 'enable insider trading'

The 2020 public announcement was on whether vets could still use G.I. bill to go to some for-profit schools.

Updated: September 22, 2021 - 11:30pm

A whistleblower group is calling for further investigation into whether information about a Department of Veterans Affairs plan last year to prevent veterans from using G.I. benefits at some for-profit schools was either mishandled or intentionally leaked to "enable insider trading."

The agency announced its intentions in a March 2020 press release, but the uptick in investor activities ahead of the public announcement is raising concerns for the watchdog group Empower Oversight and others.  

"Based on stock price, volume, and data on short selling (betting that a stock price will fall), it appears that some in the market may have traded on that inside information in the weeks leading up to the VA’s official public announcement," says nonprofit, nonpartisan Empower Oversight.

The group says a major concern is the release "appears to have leaked in advance to select groups before the general public," based on its own whistleblower contacts as well as those with Congress and Executive Branch authorities, in addition to public reports and documents.

"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," also argues the group, led by Jason Foster, who was chief investigative counsel Iowa GOP Sen. Chuck Grassley when chairman of the Senate Judiciary Committee.

"During the relevant period, one company lost 58%, or $800 million, of its market capitalization, before the VA decided to reverse its initial announcement."

The matter has been the subject of news reports, a federal FOIA lawsuit and congressional oversight letters. It has also been addressed by the VA Inspector General, and the Securities and Exchange Commission.

However, Empower Oversight says its analysis of the facts suggests that further investigation by the proper authorities is necessary to:

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

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