Post by jcline on Dec 1, 2006 16:23:38 GMT -4
STOCKGATE TODAY
An online newspaper reporting the issues of Securities Fraud
When Money Men Decide for Us All - Dec. 1, 2006
David Patch
Recent reports flooding financial media outlets worldwide has identified that a group of big business executives, lawyers, and Wall Street executives have all concluded that US securities regulations must be loosened to insure future growth in the US capital markets. More importantly, the reports all claim that US Treasury Secretary Hank Paulson Jr. backs the recommendations of this Federally appointed Committee led by former White House Economic Adviser Glenn Hubbard and former Goldman Sachs Group Inc. President John Thornton.
Apparently Sarbanes-Oxley (SARBOX) is too confining on public companies that are expected to meet the high standards of ethical business practices and accounting. SARBOX being drafted by Congress after several big businesses were caught cooking the books to better line the personal coffers of corporate executives while stealing from those less informed of the shenanigans - the investors.
Now only a few years' later big business and Wall Street are asking for the laws to be scaled back as if corporate executive shenanigans have suddenly been reigned back in. Apparently the Committee on Capital Market Regulations as it is called was so engrossed in evaluating what is wrong with regulations that they failed to pick up a newspaper and read about the most recent options backdating scandal involving greedy executives.
The panel was not limited to big business, it also included Wall Street, which if I am not mistaken, has also seen their fair share of scandals these past few years. Certainly Mr. Thornton and Mr. Paulson would remember those scandals. Goldman Sachs was knee deep in the research analyst fraud and also participated in the market timing fraud taking place.
To broad brush the committee's recommendations, the committee called for a broad overhaul of securities regulation, saying the Justice Department should pursue corporate criminal indictments only as a last resort. By this the Committee is recommending that fines, small fines at that, be imposed on those that defraud the investing public and the rules that define fraud become more relaxed making the imposed fines even less likely to be incurred.
Apparently the financial terrorism imposed upon some middle class investor can in fact be outweighed by the entitlement of some wealthy corporate executive to enrich him or herself with worldly knick-knacks, and all with the blessings of the excessively wealthy US Treasury Secretary.
So what is the problem with this Committee?
The Committee relied solely on the biased opinions and recommendations of the business classes with the most to gain from such a reduction in regulatory oversight. The Committee failed to have the balanced opinions of the small business issuer and the small retail investor in determining what is right for our public markets.
The Committee seemingly operated as a social club of wealthy businessmen who failed to understand the realities of how important our capital markets are to those less fortunate than them. All would accept if the Committee's decisions only progressed so far as to result in say one wealthy individual cheating another but these decisions involve the "mom and pops", the families simply trying to put enough away to put their children through school, and the small businesses who struggle to survive in this predatory type environment.
Former SEC Commissioner Harvey Goldschmid responding to the committee's recommendations by simply stating "The recent drive for accountability and deterrence would be replaced by a world where almost anything goes.'' Imagine that, almost anything goes and no criminal prosecution.
Wall Street's financial services industry, fined more than $10 Billion over the past 5 years, is asking for relief from regulatory oversight. The financial services industry wants to continue to rely on the self-policing policies that have lined the pockets of CEO's like Hank Paulson while investors and their families pay the price for the greed. Goldman Sachs, never far from the scandalous headlines that jeopardized the confidence of these markets, and yet now former Goldman executives are integral to a committee looking to reduce the regulations that came from such activities.
There were no criminal indictments against Wall Street executives as millions of families paid the ultimate price for Wall Street's greed. Now these same executives are recommending the light enforcement policies imposed upon them be cast across all participants of the capital market structure making every white collar criminal free to buy off any and all acts of fraud.
The committee escalated the risk vs. reward balance to insure that the risks were far outweighed by the potentials for rewards.
The moneymen of Wall Street and big business have taken it upon themselves to decide what is best for the rest of us. The social club, created by the big business administration, excluded the membership of the working class company and the working class investor from participating because neither could buy the pedigree necessary to have a lucid thought in this equation. The ability to think rationally and to participate in what is good for the US capital markets is something limited to the size of a wallet and the experiences of defrauding those excluded from the facts.
The real answer to the capital markets solution is to achieve higher levels of criminal enforcement cases as a proper deterrent to white collar crimes. Fines should no longer be limited to the ill-gotten gains reaped by the illegal act but would be based on the losses incurred by the public due to those crimes.
For example, it was estimated that investors lost hundreds of billions of dollars due to research conflicts and fraud and yet Wall Street was only fined $1.4 Billion. Hang the total bill on these firms, and make executives directly accountable, and the follow-up fraud of market timing would most likely have never taken place. Instead risk vs. reward only fostered yet another scandal against America.
The bottom line from this committee, Capital market growth requires the ability to suck in foreign companies and foreign investors. To do that we need to limit how far we audit to insure each act legally and we must create an impression our financial services are healthy through the use and allowances of bogus and fraudulent liquidity. Investor safety and investor confidence must take a back burner to "free markets" including free from regulations.
In doing so, everybody wins except the losers - the small investor and unprotected companies.
Oh, who is on this committee?
The committee is directed by Hal S. Scott, Nomura Professor and Director of International Financial Systems at Harvard Law School, and co-chaired by Glenn Hubbard, Dean of Columbia Business School, and John L. Thornton, Chairman of the Board of the Brookings Institution. The other committee members are Samuel DiPiazza, Global CEO, PricewaterhouseCoopers; Donald Evans, CEO, The Financial Services Forum; former U.S. Secretary of Commerce; Robert Glauber, Visiting Professor, Harvard Law School; former Chairman & CEO, NASD; Ken Griffin, President & CEO, Citadel Investment Group LLC; Charles O. Holliday, Chairman & CEO, Dupont; Cathy Kinney, President & Co-COO, NYSE; Ira M. Millstein, Partner, Weil, Gotshal & Manges; Steve Odland, Chairman & CEO, Office Depot; William Parrett, CEO, Deloitte; Jeffrey M. Peek, Chairman & CEO, CIT Group Inc.; Robert Pozen, Chairman, MFS Investment Management; Wilbur L. Ross Jr., Chairman & CEO, WL Ross & Co. LLC; James Rothenberg, President & Director, Capital Research and Management Co.; Thomas A. Russo, Vice Chairman, Chief Legal Officer, Lehman Brothers; Leonard Schaeffer, Founding Chairman, WellPoint Health Network; Peter Tufano, Sylvan C. Coleman Professor of Financial Management, Harvard Business School; and Luigi Zingales, Robert C. McCormack Professor of Entrepreneurship and Finance, University of Chicago Graduate School of Business.
A list riddled with past and present Wall Street executives, regulators, and fund managers. The Committee was also funded by Hank Greenberg who spent $500,000 to support such a committee. Greenberg can be best known for his 2005 scandalous activities at AIG in which the former Chairman has been accused of fraud by the US Attorney and NY AG Eliot Spitzer.
Who's not seen on this Committee?
Nobody from the SEC's Small Business Council was apparently qualified to be part of this panel to represent the interests of small business. The panel also lacked any investor protection groups who could speak out on what impacts such changes would have on teh retail investor. The only investors being spoken for - the rich and famous.
The best we can hope for, the new Congress comes in and cleans house on these thugs.
For more on this issue please visit the Host site at www.investigatethesec.com .
Copyright 2006
An online newspaper reporting the issues of Securities Fraud
When Money Men Decide for Us All - Dec. 1, 2006
David Patch
Recent reports flooding financial media outlets worldwide has identified that a group of big business executives, lawyers, and Wall Street executives have all concluded that US securities regulations must be loosened to insure future growth in the US capital markets. More importantly, the reports all claim that US Treasury Secretary Hank Paulson Jr. backs the recommendations of this Federally appointed Committee led by former White House Economic Adviser Glenn Hubbard and former Goldman Sachs Group Inc. President John Thornton.
Apparently Sarbanes-Oxley (SARBOX) is too confining on public companies that are expected to meet the high standards of ethical business practices and accounting. SARBOX being drafted by Congress after several big businesses were caught cooking the books to better line the personal coffers of corporate executives while stealing from those less informed of the shenanigans - the investors.
Now only a few years' later big business and Wall Street are asking for the laws to be scaled back as if corporate executive shenanigans have suddenly been reigned back in. Apparently the Committee on Capital Market Regulations as it is called was so engrossed in evaluating what is wrong with regulations that they failed to pick up a newspaper and read about the most recent options backdating scandal involving greedy executives.
The panel was not limited to big business, it also included Wall Street, which if I am not mistaken, has also seen their fair share of scandals these past few years. Certainly Mr. Thornton and Mr. Paulson would remember those scandals. Goldman Sachs was knee deep in the research analyst fraud and also participated in the market timing fraud taking place.
To broad brush the committee's recommendations, the committee called for a broad overhaul of securities regulation, saying the Justice Department should pursue corporate criminal indictments only as a last resort. By this the Committee is recommending that fines, small fines at that, be imposed on those that defraud the investing public and the rules that define fraud become more relaxed making the imposed fines even less likely to be incurred.
Apparently the financial terrorism imposed upon some middle class investor can in fact be outweighed by the entitlement of some wealthy corporate executive to enrich him or herself with worldly knick-knacks, and all with the blessings of the excessively wealthy US Treasury Secretary.
So what is the problem with this Committee?
The Committee relied solely on the biased opinions and recommendations of the business classes with the most to gain from such a reduction in regulatory oversight. The Committee failed to have the balanced opinions of the small business issuer and the small retail investor in determining what is right for our public markets.
The Committee seemingly operated as a social club of wealthy businessmen who failed to understand the realities of how important our capital markets are to those less fortunate than them. All would accept if the Committee's decisions only progressed so far as to result in say one wealthy individual cheating another but these decisions involve the "mom and pops", the families simply trying to put enough away to put their children through school, and the small businesses who struggle to survive in this predatory type environment.
Former SEC Commissioner Harvey Goldschmid responding to the committee's recommendations by simply stating "The recent drive for accountability and deterrence would be replaced by a world where almost anything goes.'' Imagine that, almost anything goes and no criminal prosecution.
Wall Street's financial services industry, fined more than $10 Billion over the past 5 years, is asking for relief from regulatory oversight. The financial services industry wants to continue to rely on the self-policing policies that have lined the pockets of CEO's like Hank Paulson while investors and their families pay the price for the greed. Goldman Sachs, never far from the scandalous headlines that jeopardized the confidence of these markets, and yet now former Goldman executives are integral to a committee looking to reduce the regulations that came from such activities.
There were no criminal indictments against Wall Street executives as millions of families paid the ultimate price for Wall Street's greed. Now these same executives are recommending the light enforcement policies imposed upon them be cast across all participants of the capital market structure making every white collar criminal free to buy off any and all acts of fraud.
The committee escalated the risk vs. reward balance to insure that the risks were far outweighed by the potentials for rewards.
The moneymen of Wall Street and big business have taken it upon themselves to decide what is best for the rest of us. The social club, created by the big business administration, excluded the membership of the working class company and the working class investor from participating because neither could buy the pedigree necessary to have a lucid thought in this equation. The ability to think rationally and to participate in what is good for the US capital markets is something limited to the size of a wallet and the experiences of defrauding those excluded from the facts.
The real answer to the capital markets solution is to achieve higher levels of criminal enforcement cases as a proper deterrent to white collar crimes. Fines should no longer be limited to the ill-gotten gains reaped by the illegal act but would be based on the losses incurred by the public due to those crimes.
For example, it was estimated that investors lost hundreds of billions of dollars due to research conflicts and fraud and yet Wall Street was only fined $1.4 Billion. Hang the total bill on these firms, and make executives directly accountable, and the follow-up fraud of market timing would most likely have never taken place. Instead risk vs. reward only fostered yet another scandal against America.
The bottom line from this committee, Capital market growth requires the ability to suck in foreign companies and foreign investors. To do that we need to limit how far we audit to insure each act legally and we must create an impression our financial services are healthy through the use and allowances of bogus and fraudulent liquidity. Investor safety and investor confidence must take a back burner to "free markets" including free from regulations.
In doing so, everybody wins except the losers - the small investor and unprotected companies.
Oh, who is on this committee?
The committee is directed by Hal S. Scott, Nomura Professor and Director of International Financial Systems at Harvard Law School, and co-chaired by Glenn Hubbard, Dean of Columbia Business School, and John L. Thornton, Chairman of the Board of the Brookings Institution. The other committee members are Samuel DiPiazza, Global CEO, PricewaterhouseCoopers; Donald Evans, CEO, The Financial Services Forum; former U.S. Secretary of Commerce; Robert Glauber, Visiting Professor, Harvard Law School; former Chairman & CEO, NASD; Ken Griffin, President & CEO, Citadel Investment Group LLC; Charles O. Holliday, Chairman & CEO, Dupont; Cathy Kinney, President & Co-COO, NYSE; Ira M. Millstein, Partner, Weil, Gotshal & Manges; Steve Odland, Chairman & CEO, Office Depot; William Parrett, CEO, Deloitte; Jeffrey M. Peek, Chairman & CEO, CIT Group Inc.; Robert Pozen, Chairman, MFS Investment Management; Wilbur L. Ross Jr., Chairman & CEO, WL Ross & Co. LLC; James Rothenberg, President & Director, Capital Research and Management Co.; Thomas A. Russo, Vice Chairman, Chief Legal Officer, Lehman Brothers; Leonard Schaeffer, Founding Chairman, WellPoint Health Network; Peter Tufano, Sylvan C. Coleman Professor of Financial Management, Harvard Business School; and Luigi Zingales, Robert C. McCormack Professor of Entrepreneurship and Finance, University of Chicago Graduate School of Business.
A list riddled with past and present Wall Street executives, regulators, and fund managers. The Committee was also funded by Hank Greenberg who spent $500,000 to support such a committee. Greenberg can be best known for his 2005 scandalous activities at AIG in which the former Chairman has been accused of fraud by the US Attorney and NY AG Eliot Spitzer.
Who's not seen on this Committee?
Nobody from the SEC's Small Business Council was apparently qualified to be part of this panel to represent the interests of small business. The panel also lacked any investor protection groups who could speak out on what impacts such changes would have on teh retail investor. The only investors being spoken for - the rich and famous.
The best we can hope for, the new Congress comes in and cleans house on these thugs.
For more on this issue please visit the Host site at www.investigatethesec.com .
Copyright 2006