Post by jannikki on Aug 17, 2007 22:16:50 GMT -4
STOCKGATE TODAY
An online newspaper reporting the issues of Securities Fraud
Is SEC a Breeding Ground for Future Fraud? - August 17, 2007
David Patch
The mission of the Securities and Exchange Commission as stated on their web site is to "protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation." Could it be that left out of the mission statement was "and breed future crooks and criminals"?
More and more these days we are being exposed to the pedigree of some past and present SEC Attorney's and leaders who have used their stature to violate the law.
The most public display of malfeasance within the agency is illustrated in the joint Senate Judiciary and Financial Services investigation into the termination of Gary Aguirre. The report issued at the conclusion to the Senate investigation detailed in great length the wrongful termination of an SEC Attorney looking to bring an enforcement action against a potential but politically connected crook. Hidden in the bowels of this report was something more sinister to consider, that of the integrity of some who wear or have worn the badge of the SEC.
The crooked cop's so to speak.
In the report were details of how several past and present SEC attorney's actually misled the Senate investigators in the Senate's quest for the truth. The SEC, responsible for enforcement against those that provide false or misleading information, engaged directly in the dissemination of false or misleading information in an attempt at self-preservation.
When asked why Gary Aguirre was terminated SEC Branch Chief Robert Hanson opined that one such cause for termination was the failure by Aguirre to submit for review subpoenas before issuance. Hanson was later called to the carpet on this statement as e-mails exposed evidence that such subpoenas were in fact provided for review prior to issuance.
Why the lie? Isn't a lie in a formal inquiry perjury? Was what Hanson did no less despicable than when Martha Stewart lied in an act of self-preservation and got caught?
Likewise, when former Associate Director Paul Berger was interviewed on when his relationship with his present employer Debevoise & Plimpton initiated Berger gave the less than truthful answer of January 2006 instead of the actual timeframe of September 2005. The difference in the dates having significance to the conflicts of interest between Debevoise and an enforcement case Berger was a party to, the Aguirre's case against John Mack.
While the Senate investigation concluded that Berger's relationship did not have any direct outcome in the eventual SEC decisions, the fact that Berger attempted to cover it up implies some personal level of unease.
Berger lied in a formal inquiry and that lie only came to truth based on digging deeper into the facts, not by Berger coming clean. To lie in a formal congressional inquiry is an act of perjury as defined under Federal law.
But Berger and Hanson are neither the first nor the last to act unprofessionally while representing the Commission and the integrity of the Commission.
In June of this year the SEC brought fraud charges against two lawyers who had engaged in a penny stock scam. One of the lawyers charged was Phillip W. Offill Jr, a former SEC enforcement official in the Ft. Worth Office of the Commission.
The complaint filed indicates that while Offill had not participated in the selling of stock in the scam he profited from legal services he provided while being in full knowledge that the scam was taking place.
Remind you of the old lawyer for the mob stories you used to hear about.
This week, former SEC Chairman Richard Breeden sent out a memo to shareholders of H&R Block and in the memo he misrepresented the facts. As an activist shareholder running his namesake hedge fund Breeden presented to H&R Block shareholders a proxy that would place his proposed team on the board of the company and he stated that the present board of the company agreed with such a vote.
The problem, H&R Block's board was not in agreement with the vote. In fact they opposed it.
Like Hanson and Berger, Breeden simply claimed ignorance. A typo was the response and promised to correct the mistake. Ah yes, the infamous typo. Agreed and opposed are spell so similarly that it could easily be confused.
Breeden represents the top position at the SEC. He uses these credentials to get investors to come into his fund and he uses his credibility as part of his activist intentions. He is fully aware that when the financial media covers his activism the reports do not simply close at Richard Breeden Hedge Fund activist they follow through with 'former Chairman of the SEC'.
The SEC has no excuse for not throwing the book at Breeden. They have to seek him out and investigate his actions.
The SEC is an agency dedicated to rooting out and talking enforcement action against those that attempt to manipulate a market through the use of false and misleading information and Breeden was once the top dog in that agency. To allow the credibility of that position be diminished by ignoring the acts of this once top dog is doing a disservice to those who put the trust in the integrity of the agency itself.
How can there be confidence in the agency when such former ranking officials then go out into the industry they once policed and commit the crimes they once enforced?
My personal favorite smoke and mirror show involves present Asst. Director of Market Regulations James Brigagliano.
Jimmy as I call him responded in writing to a 2004 inquiry made by Senator Paul Sarbanes and flat out misrepresented facts in order to redirect the attentions of Senator Sarbanes. What is worse, after Brigaglaino and other ranking officials at the SEC, including former Inspector General Walter Stachnik, were informed of this misleading document a more appropriate response was never provided.
In 2004 Brigagliano had blamed the issued raised in April 2003 e-mails drafted by several members of Wall Street on a corporate action he fully details in his memo. The problem of course being that the corporate action he places the blame on was transacted in June of 2004 and therefore totally unrelated to the concerns raised in the April 2003 e-mails.
Why the misdirection? It was a simple inquiry asking for a response to documented and date stamped e-mails. Why dedicate effort to come out with an excuse that does not pass the smell test? Does Jimmy not recognize that April 2003 comes long before June 2004 and thus an event in April 2003 can in no way be attributed to a June 2004 action?
Now we all know that you can find bad apples anywhere including the halls of Federal Buildings. The question I ask is, has the SEC become a breeding ground for future crooks who will use their SEC experience on their resume to get a clean health check for their illegal actions. Does Government immunity provide some with the wrong sense of security and thus lead them into committing the fraud they were once employed to uphold?
In the real world, when a bad cop is rooted out the penalties handed down by the Judge is usually stiffer than that handed down to another because the cop took an oath to protect the people and the people put blind faith in that role. These past and present SEC attorney's, those who continue to act irresponsibly need to be treated in a similar fashion. The message must be sent out that to carry the honor and recognition of the SEC on their resume will be treated with greater penalty if they violate the trust they once were engaged in protecting.
How can people not put into question the actions of these attorneys while they worked at the agency when we see how they act today?
Chairman Cox, this is your ship now how do you plan on steering it back on course? Right now the agency is looking like a ship headed for an iceberg and those that will perish in the crash will be the investing public you are commissioned to protect. Those investors looking to "secure their futures, pay for homes, and send children to college."
For more on this issue please visit the Host site at www.investigatethesec.com (posted with permission)
Copyright 2007
An online newspaper reporting the issues of Securities Fraud
Is SEC a Breeding Ground for Future Fraud? - August 17, 2007
David Patch
The mission of the Securities and Exchange Commission as stated on their web site is to "protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation." Could it be that left out of the mission statement was "and breed future crooks and criminals"?
More and more these days we are being exposed to the pedigree of some past and present SEC Attorney's and leaders who have used their stature to violate the law.
The most public display of malfeasance within the agency is illustrated in the joint Senate Judiciary and Financial Services investigation into the termination of Gary Aguirre. The report issued at the conclusion to the Senate investigation detailed in great length the wrongful termination of an SEC Attorney looking to bring an enforcement action against a potential but politically connected crook. Hidden in the bowels of this report was something more sinister to consider, that of the integrity of some who wear or have worn the badge of the SEC.
The crooked cop's so to speak.
In the report were details of how several past and present SEC attorney's actually misled the Senate investigators in the Senate's quest for the truth. The SEC, responsible for enforcement against those that provide false or misleading information, engaged directly in the dissemination of false or misleading information in an attempt at self-preservation.
When asked why Gary Aguirre was terminated SEC Branch Chief Robert Hanson opined that one such cause for termination was the failure by Aguirre to submit for review subpoenas before issuance. Hanson was later called to the carpet on this statement as e-mails exposed evidence that such subpoenas were in fact provided for review prior to issuance.
Why the lie? Isn't a lie in a formal inquiry perjury? Was what Hanson did no less despicable than when Martha Stewart lied in an act of self-preservation and got caught?
Likewise, when former Associate Director Paul Berger was interviewed on when his relationship with his present employer Debevoise & Plimpton initiated Berger gave the less than truthful answer of January 2006 instead of the actual timeframe of September 2005. The difference in the dates having significance to the conflicts of interest between Debevoise and an enforcement case Berger was a party to, the Aguirre's case against John Mack.
While the Senate investigation concluded that Berger's relationship did not have any direct outcome in the eventual SEC decisions, the fact that Berger attempted to cover it up implies some personal level of unease.
Berger lied in a formal inquiry and that lie only came to truth based on digging deeper into the facts, not by Berger coming clean. To lie in a formal congressional inquiry is an act of perjury as defined under Federal law.
But Berger and Hanson are neither the first nor the last to act unprofessionally while representing the Commission and the integrity of the Commission.
In June of this year the SEC brought fraud charges against two lawyers who had engaged in a penny stock scam. One of the lawyers charged was Phillip W. Offill Jr, a former SEC enforcement official in the Ft. Worth Office of the Commission.
The complaint filed indicates that while Offill had not participated in the selling of stock in the scam he profited from legal services he provided while being in full knowledge that the scam was taking place.
Remind you of the old lawyer for the mob stories you used to hear about.
This week, former SEC Chairman Richard Breeden sent out a memo to shareholders of H&R Block and in the memo he misrepresented the facts. As an activist shareholder running his namesake hedge fund Breeden presented to H&R Block shareholders a proxy that would place his proposed team on the board of the company and he stated that the present board of the company agreed with such a vote.
The problem, H&R Block's board was not in agreement with the vote. In fact they opposed it.
Like Hanson and Berger, Breeden simply claimed ignorance. A typo was the response and promised to correct the mistake. Ah yes, the infamous typo. Agreed and opposed are spell so similarly that it could easily be confused.
Breeden represents the top position at the SEC. He uses these credentials to get investors to come into his fund and he uses his credibility as part of his activist intentions. He is fully aware that when the financial media covers his activism the reports do not simply close at Richard Breeden Hedge Fund activist they follow through with 'former Chairman of the SEC'.
The SEC has no excuse for not throwing the book at Breeden. They have to seek him out and investigate his actions.
The SEC is an agency dedicated to rooting out and talking enforcement action against those that attempt to manipulate a market through the use of false and misleading information and Breeden was once the top dog in that agency. To allow the credibility of that position be diminished by ignoring the acts of this once top dog is doing a disservice to those who put the trust in the integrity of the agency itself.
How can there be confidence in the agency when such former ranking officials then go out into the industry they once policed and commit the crimes they once enforced?
My personal favorite smoke and mirror show involves present Asst. Director of Market Regulations James Brigagliano.
Jimmy as I call him responded in writing to a 2004 inquiry made by Senator Paul Sarbanes and flat out misrepresented facts in order to redirect the attentions of Senator Sarbanes. What is worse, after Brigaglaino and other ranking officials at the SEC, including former Inspector General Walter Stachnik, were informed of this misleading document a more appropriate response was never provided.
In 2004 Brigagliano had blamed the issued raised in April 2003 e-mails drafted by several members of Wall Street on a corporate action he fully details in his memo. The problem of course being that the corporate action he places the blame on was transacted in June of 2004 and therefore totally unrelated to the concerns raised in the April 2003 e-mails.
Why the misdirection? It was a simple inquiry asking for a response to documented and date stamped e-mails. Why dedicate effort to come out with an excuse that does not pass the smell test? Does Jimmy not recognize that April 2003 comes long before June 2004 and thus an event in April 2003 can in no way be attributed to a June 2004 action?
Now we all know that you can find bad apples anywhere including the halls of Federal Buildings. The question I ask is, has the SEC become a breeding ground for future crooks who will use their SEC experience on their resume to get a clean health check for their illegal actions. Does Government immunity provide some with the wrong sense of security and thus lead them into committing the fraud they were once employed to uphold?
In the real world, when a bad cop is rooted out the penalties handed down by the Judge is usually stiffer than that handed down to another because the cop took an oath to protect the people and the people put blind faith in that role. These past and present SEC attorney's, those who continue to act irresponsibly need to be treated in a similar fashion. The message must be sent out that to carry the honor and recognition of the SEC on their resume will be treated with greater penalty if they violate the trust they once were engaged in protecting.
How can people not put into question the actions of these attorneys while they worked at the agency when we see how they act today?
Chairman Cox, this is your ship now how do you plan on steering it back on course? Right now the agency is looking like a ship headed for an iceberg and those that will perish in the crash will be the investing public you are commissioned to protect. Those investors looking to "secure their futures, pay for homes, and send children to college."
For more on this issue please visit the Host site at www.investigatethesec.com (posted with permission)
Copyright 2007