THE SEC IS A COWARDLY LION

       

     The SEC Commissioners broke out the champagne (see above) when Rajat Gupta, former Board Member of Goldman Sachs, was convicted of insider trading violations. The Commissioners had done the same when they reached a settlement on a handful of cases that were brought against Wall Streeters & others for their activities related to the preparation, packaging and sale of rinky-dinky mortgages (sub-prime) to unsuspecting customers all over the globe and that led to a worldwide recession.

My gripe with the SEC is twofold. First with the embarrassingly meager number of actions the SEC undertook, the Commissioners almost always FINED THE CORPORATIONS, NOT THE INDIVIDUIALS WHO HAD PERPETRATED THESE HIGH JINKS. And by fining the corporations they inflicted a double whammy on its stockholders - - - first the value of their stock declined because of the huge losses incurred by these public companies in unraveling and disposing of the mortgage securities they held and then again when the corporations’ coffers were diminished by the fines. 

IT’S THE INDIVIDUALS WHO DID THESE MISDEEDS WHO SHOULD HAVE BEEN PUNISHED, NOT THE UNSUSPECTING AND LIED TO STOCKHOLDERS. (I guess you can tell by my vitriolic tone that I was a stockholder in one of these Wall Street firms whose stock went into the tank.

 These guys and gals at the SEC should be ashamed of themselves for their failure to bring to justice anyone in the credit ratings agencies who put their 
stamp of approval on mortgage packages that some people in their firms knew were just a time-bomb for investors, and for letting the hundreds of mortgage brokers and bankers go scot free who had feathered their own nests by pushing home buyers into mortgages that were sure to come home to roost, and for closing their eyes to the myriad Wall Streeters who packaged and sold these toxic instruments.  

      And even when the SEC settles a case with Wall Streets’ bankers it often makes a terrible deal, if the following case is any example. Only one person has been brave enough to raise an objection to the SEC’s giveaway. Judge Jed Rakoff, who was presiding over a lawsuit settlement between Bank of America and the SEC, called the $33 million dollar agreed upon settlement “unreasonable and unfair”. He sent the settlement deal back and the parties came in with a revised $150 million settlement. Rakoff still had criticisms over the new settlement calling the agreement "half-baked justice", but said that the $150 million settlement is "better than nothing.”

The SEC contends that it must settle most of the cases it brings because it does not have the money or the staff to battle deep-pocketed Wall Street firms in court. Maybe Romney, if elected, will take money from Big Bird and give it to the Cowardly Lions. The SEC claims it has to settle with these behemoths without their “admitting wrongdoing” because that can be used against them in investor lawsuits. 

Here’s another example when the SEC lashes put with a “slap on the wrist, instead of with a whiplash to the “kishkes”. The Treasurer of Citigroup was fined $100,000 for omitting to mention $ 40 billion of sub-prime mortgages to shareholders. (I can remember was $40 billion was a lot of money, but after listening to the Presidential debates I realize that unless it’s a trillion it’s chicken feed.) The executive paid this fine out of his piggy bank as he earned $10-20 million per year.

Let the Commissioners drink all the champagne they want. I hope it will help them to get their priorities straight and develop backbones.