Securities and Exchange Commission

Congress’s Ongoing Insider Trading Scandal

/ Jack Marshall / 30 Comments

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The best I can figure is that when the exposure of outrageous corruption will devastate power politicians in both parties, neither party, nor their partisan herds, nor their lackey journalist allies, see it as advantageous to look under that rock. Does anyone have a better theory? Because the fact that almost all Senators and members of Congress, and often their staffs, enrich themselves using their knowledge of what laws are about to be passed, and the fact not only is nothing being done about it, but that most of the public doesn’t even know about it and no one is working very hard to tell them, is maddening.

The latest chapter is typical of the hypocrisy and dishonesty in this long-running ethics fiasco.

In 2012, Congress passed the STOCK Act, a bill that was supposed to stop insider trading for lawmakers and their staffs. Of course, the laws making insider trading illegal should have already stopped the practice, and the ethics rules prohibited it as well with such phrases as “conflicts of interest” and “appearance of impropriety.” Lawmakers aren’t supposed to break laws, you see. No, really. They’re not!
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Ethics Quiz: The “You Stink” Farewell Retirement Party Speech

/ Jack Marshall / 20 Comments

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As reported by Bloomberg and Above the Law, James Kidney, an SEC enforcement lawyer who had worked at the agency since 1986 (with a four year hiatus in the private sector) favored his retirement party with a fiery speech telling his colleagues what a lousy job they do.

The SEC has become “an agency that polices the broken windows on the street level and rarely goes to the penthouse floors,” Kidney said“On the rare occasions when enforcement does go to the penthouse, good manners are paramount. Tough enforcement, risky enforcement, is subject to extensive negotiation and weakening.”

Kidney accused SEC manager of being  focused on getting high-paying jobs after their government service rather than on bringing difficult cases. “I have had bosses, and bosses of my bosses, whose names we all know, who made little secret that they were here to punch their ticket,” Kidney said. “They mouthed serious regard for the mission of the commission, but their actions were tentative and fearful in many instances.”

He accused his soon-to-be former employers of having little interest in “afflicting the comfortable and powerful,”and condemned the agency for massaging  statistics to burnish its reputation. There was more. We only know of Kidney’s comments from notes; there was no video or formal transcript.

Your Ethics Alarms Ethics Quiz today:

Was Kidney’s farewell speech ethical?

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Punishing Corrupt Companies Without Punishing the People Who Make Them Corrupt

/ Jack Marshall / 4 Comments

By all means, fine corrupt companies, but we need a new dress code for their management.

From The National Law Journal, December 8:

“The Justice Department has announced that Wachovia Bank N.A., now known as Wells Fargo Bank N.A., will pay $148 million to federal and state agencies after admitting to anti-competitive activity in the municipal bond investments market.”

I understand why the Justice Department, the SEC and other federal agencies fine companies huge amounts for what is essentially criminal conduct, choosing negotiated settlements rather than engaging in time-consuming trials that would cost taxpayers money and risk failing for reasons ranging from investigator error to skillful defense strategy. Nevertheless, the policy encourages rather than discourages unethical conduct by corporate decision-makers. It  does nothing to improve a culture that tends to define a bad business practice as a gamble that doesn’t work, or a scheme that gets discovered. Continue reading →

I Wonder…What Would It Take To Get Fired From the SEC?

/ Jack Marshall / 3 Comments

Keep up the way you’re going, guys. You’ll drive me to “Occupy D.C.” yet.

Do you think The Donald would be willing to run the SEC? At least he knows how to fire someone.

Eight Security and Exchange Commission employees were demoted, docked pay, suspended or otherwise disciplined for their role in the agency’s rank incompetence that allowed Bernard Madoff to steal billions of dollars and destroy lives and charities despite the timely warning of a persistent whistleblower, and more red flags than a bullfight. Yet despite mismanagement of epic and disgraceful proportions, the SEC couldn’t bring itself to fire anyone.

This is the state of accountability in today’s America. Run a corporation into the ground, lose the jobs of thousands, and take a mega-million dollar parting gift. Accept a bribe while you are serving as a State Senator, and not only keep your job, but get acquitted by a jury on the theory that you are too stupid to understand that what you were doing was a crime. Now the SEC’s response to an almost unimaginable breach of diligence in investment oversight by its staff doesn’t involve getting rid of a single one of the individuals responsible—even the individual deemed the most culpable, whose termination was recommended by the agency’s lawyers.

Why, you ask? Continue reading →