While the president makes yet more speeches about how the time to leave the past behind us is now (while newly scapegoating Europe for the economic catastrophe), the sniping war against S&P continues, only this time with a twist. According to the FT, the SEC has asked the rating agency to disclose who at the company knew about the downgrade, “as part of a preliminary look into potential insider trading.” The funny thing is that while the answer will be everyone, even in that case the SEC will end up doing nothing as it always ‘does’ (pun intended), and the whole process is nothing but a sham to humiliate the rating agency. “The inquiry was made by the SEC’s examination staff, which has oversight of credit rating firms, one person familiar with the matter said. The exam staff can make referrals to the SEC’s enforcement division if it believes any laws have been violated, but the inquiry might not result in a referral….Proving someone leaked information about the downgrade, or traded ahead of it, could be challenging. Many traders anticipated the downgrade and bets could occur across numerous securities or currencies without inside information. In a traditional insider trading case, there is often a more predictable correlation between a company’s stock price and a particular development.” Of course the next question is what is the null hypothesis: that leakees would buy or sell bonds based on the info? Because the natural response would be to dump treasuries even as the real outcome was a plunge in equities and a scramble to safe one-ply paper. So is PIMCO about to be charged with insder trading for having sold 10 Years even though in reality the spread tightened by a record 60 bps in the following week?