Post by jannikki on Nov 12, 2005 10:08:07 GMT -4
SEC Defines Effective Regulatory Expectations – Misses Target Themselves – August 20, 2004
By Dave Patch
According to an article out of the PIPE’s Report the SEC has apparently chosen to take a reactionary regulatory approach to shorting abuses instead of preventative. This approach by the SEC has many confused, including the NASD, and makes us all wonder who was driving the bus on this latest effort. Did the SEC succumb to Industry Pressure? Can they still be effective if they did?
From a source within the SEC the PIPE’s Report states: Market Regulation staffers at the SEC, speaking anonymously, defended Reg SHO’s lack of market-based settlement requirements, while admitting the NASD proposals represent a more rigorous approach. Reg SHO “imposes a penalty, because you have to pre-borrow to execute any further trades and secondly, it may be cause for disciplinary action, but perhaps it is not as strong as our friends at the NASD would like”. Later statements were: “We think that Reg SHO has an enforcement mechanism that a market-based remedy does not have. But if the NASD thinks they have a better idea, they better come over and talk to us about it.”
From one living this nightmare, this spokesman and those associated with this issue at the SEC should be terminated on the spot. The SEC wants to allow the fraud to take place FIRST and then have reactionary stopgaps? Whatever happened to prevention? Didn’t the Chairman state unequivocally that the SEC would become more preventative after getting trumped on every recent scandal? How is this in the best interests of the investor?
By my interpretation, this SEC spokesman has just admitted that they are willing to allow the abuse to take place and only initiate penalties after settlement failures have reached abusive levels. While the SEC does place this restriction of “pre-borrowing” for FUTURE short sales, it only becomes a restriction once the failures in settlement reach above a certain abusive threshold. The SEC never then forces the trades that failed settlement above this level to be immediately settled either. So where is the pain? What prevents the criminals from attempting the crime? The NASD’s proposal, unlike the SEC’s, would eliminate any and all opportunity to reach that abusive threshold in the first place as they focus on forcing trades to settle promptly as mandated in Section 17A of the Securities Act. The NASD forces the market to act responsibly and that - Is a Bad thing?
The fact that the NASD submitted their proposal to the SEC’s Division of Market Regulation some 4 months before the SEC’s Division of Market Regulation released Reg SHO, and yet no communication took place afterwards on the differences, seems – How do you say, Incompetent?
Further confidence busters in these Regulations come from the concept of “may be cause for disciplinary action”. Are we back to interpretive laws? Hasn’t that been the fly in the ointment already? Does that mean the SEC may take their usual 4 years to investigate and prosecute the criminal after the investor has been abused and his/her investment stolen? I have not yet seen my restitution on the Mutual Fund losses or the Research fraud. I think Wall Street is still using my money to make more before they hand over my cash – Devalued by Inflation by the time I see anything. So how is imaginary enforcement going to make me feel cozy? I would rather see up front prevention as most investors I speak to would as well.
In retrospect, recently I did do some research back in time and in 1996 the SEC made harsh claims against the NASD regarding their conflicts due to member pressures. The SEC claimed that the NASD could not be an effective SRO until they had divorced themselves from member pressures dictating their actions. I contend that the SEC should go back to that 1996 report where they chastised the NASD for their activities towards member enforcements and then review their most recent actions regarding this issue. I think the SEC is now that ineffective Regulatory Agency as the NASD this time trumps their efforts and like the battle with NY AG Spitzer the SEC is caught coming up short. They are back on the defensive war path. www.sec.gov/litigation/investreport/nd21a-report.txt
The SEC, regarding trade settlement, claims that “Respected People, Industry People” identify that settlement is a complicated issue. The NASD does not appear to agree with this assertion. Has the SEC voided the concerns of a fellow enforcement agency for the voices of “Respected People” from within the Industry? I certainly would like to know if any of these “Respected People” are officers from the numerous firms fined Hundreds of Millions for their participation in these most recent securities fraud.
The NASD is the closest element to the shorting fraud as it is perceived to be the OTCBB and penny stocks that make up the majority of the 4% abused companies identified by the SEC. If the NASD thinks it is an issue of Industry abuses, why is the SEC so skeptical about harnessing the Industry? Why did the SEC talk to Industry members about the issue without meeting with the NASD? Was Member pressure the driving force to a watered down reform package?
The SEC has pitted itself against the NASD, the NASAA, Investors, and Issuers from throughout the markets when they created a less than credible Regulation SHO. The SEC did this because of the present status of the settlement failures in our markets; 4% of all publicly traded companies are presently above the abusive level, and the impacts of forcing settlement on the Industry. The SEC has yet to help us understand what it is that can justify trade settlements having indefinite time limits for settlement. The NASD can’t figure it out. The Investors can’t figure it out. Why can’t the SEC come clean with legitimate scenario’s that can explain away indefinite timelines on failures? As for the SEC’s Congressional oversight Committees, would we expect any less oversight in a political year where Wall Street campaign contributions are the talk of the War Chests?
For STOCKGATE TODAY and its readers, we want answers. We want the SEC to come clean with facts and stop the rhetoric. We want to know and understand how Congress could misinterpret their Securities Act so poorly.
By Dave Patch
According to an article out of the PIPE’s Report the SEC has apparently chosen to take a reactionary regulatory approach to shorting abuses instead of preventative. This approach by the SEC has many confused, including the NASD, and makes us all wonder who was driving the bus on this latest effort. Did the SEC succumb to Industry Pressure? Can they still be effective if they did?
From a source within the SEC the PIPE’s Report states: Market Regulation staffers at the SEC, speaking anonymously, defended Reg SHO’s lack of market-based settlement requirements, while admitting the NASD proposals represent a more rigorous approach. Reg SHO “imposes a penalty, because you have to pre-borrow to execute any further trades and secondly, it may be cause for disciplinary action, but perhaps it is not as strong as our friends at the NASD would like”. Later statements were: “We think that Reg SHO has an enforcement mechanism that a market-based remedy does not have. But if the NASD thinks they have a better idea, they better come over and talk to us about it.”
From one living this nightmare, this spokesman and those associated with this issue at the SEC should be terminated on the spot. The SEC wants to allow the fraud to take place FIRST and then have reactionary stopgaps? Whatever happened to prevention? Didn’t the Chairman state unequivocally that the SEC would become more preventative after getting trumped on every recent scandal? How is this in the best interests of the investor?
By my interpretation, this SEC spokesman has just admitted that they are willing to allow the abuse to take place and only initiate penalties after settlement failures have reached abusive levels. While the SEC does place this restriction of “pre-borrowing” for FUTURE short sales, it only becomes a restriction once the failures in settlement reach above a certain abusive threshold. The SEC never then forces the trades that failed settlement above this level to be immediately settled either. So where is the pain? What prevents the criminals from attempting the crime? The NASD’s proposal, unlike the SEC’s, would eliminate any and all opportunity to reach that abusive threshold in the first place as they focus on forcing trades to settle promptly as mandated in Section 17A of the Securities Act. The NASD forces the market to act responsibly and that - Is a Bad thing?
The fact that the NASD submitted their proposal to the SEC’s Division of Market Regulation some 4 months before the SEC’s Division of Market Regulation released Reg SHO, and yet no communication took place afterwards on the differences, seems – How do you say, Incompetent?
Further confidence busters in these Regulations come from the concept of “may be cause for disciplinary action”. Are we back to interpretive laws? Hasn’t that been the fly in the ointment already? Does that mean the SEC may take their usual 4 years to investigate and prosecute the criminal after the investor has been abused and his/her investment stolen? I have not yet seen my restitution on the Mutual Fund losses or the Research fraud. I think Wall Street is still using my money to make more before they hand over my cash – Devalued by Inflation by the time I see anything. So how is imaginary enforcement going to make me feel cozy? I would rather see up front prevention as most investors I speak to would as well.
In retrospect, recently I did do some research back in time and in 1996 the SEC made harsh claims against the NASD regarding their conflicts due to member pressures. The SEC claimed that the NASD could not be an effective SRO until they had divorced themselves from member pressures dictating their actions. I contend that the SEC should go back to that 1996 report where they chastised the NASD for their activities towards member enforcements and then review their most recent actions regarding this issue. I think the SEC is now that ineffective Regulatory Agency as the NASD this time trumps their efforts and like the battle with NY AG Spitzer the SEC is caught coming up short. They are back on the defensive war path. www.sec.gov/litigation/investreport/nd21a-report.txt
The SEC, regarding trade settlement, claims that “Respected People, Industry People” identify that settlement is a complicated issue. The NASD does not appear to agree with this assertion. Has the SEC voided the concerns of a fellow enforcement agency for the voices of “Respected People” from within the Industry? I certainly would like to know if any of these “Respected People” are officers from the numerous firms fined Hundreds of Millions for their participation in these most recent securities fraud.
The NASD is the closest element to the shorting fraud as it is perceived to be the OTCBB and penny stocks that make up the majority of the 4% abused companies identified by the SEC. If the NASD thinks it is an issue of Industry abuses, why is the SEC so skeptical about harnessing the Industry? Why did the SEC talk to Industry members about the issue without meeting with the NASD? Was Member pressure the driving force to a watered down reform package?
The SEC has pitted itself against the NASD, the NASAA, Investors, and Issuers from throughout the markets when they created a less than credible Regulation SHO. The SEC did this because of the present status of the settlement failures in our markets; 4% of all publicly traded companies are presently above the abusive level, and the impacts of forcing settlement on the Industry. The SEC has yet to help us understand what it is that can justify trade settlements having indefinite time limits for settlement. The NASD can’t figure it out. The Investors can’t figure it out. Why can’t the SEC come clean with legitimate scenario’s that can explain away indefinite timelines on failures? As for the SEC’s Congressional oversight Committees, would we expect any less oversight in a political year where Wall Street campaign contributions are the talk of the War Chests?
For STOCKGATE TODAY and its readers, we want answers. We want the SEC to come clean with facts and stop the rhetoric. We want to know and understand how Congress could misinterpret their Securities Act so poorly.