Post by jcline on Dec 15, 2005 11:32:14 GMT -4
STOCKGATE TODAY
An online newspaper reporting the issues of Securities Fraud
Captive Regulator Cowers to Bear Stearns amidst Aiding Violations – December 15, 2005
David Patch
It starts… Bear Stearns Dodges Bullet. The December 15 article by Matt Goldstein of TheStreet.com announces the settlement between Bear Stearns and the Securities and Exchange Commission over the Bear Stearns securities clearing operations participation in covering up the late trading abuses orchestrated by the powerful Hedge Funds.
According to Goldstein, regulators had considered forcing Bear Stearns to sell off all, or a portion, of its big correspondent clearing business but instead elected to fine the firm a paltry $250 Million for aiding in the fraudulent acts. The fine levied equaled nearly 95% of Bear Stearns global clearing operations 4th quarter revenues for 2005.
But what is it about this captive regulator? Why does it appear that the SEC routinely lets the Wall Street criminals and Institutions off lightly as these criminals deceive and cheat the investing public? In this case the $250 Million fine levied against Bear Stearns merely results in a few less millions in bonus checks to the Executives and Management of this firm.
Recall it was only one year ago this week that the General Counsel to Bear Stearns, Bill Philek, opened a Conference Call pertaining to the SEC’s release of Regulation SHO stating:
"To give you that brief introduction in Reg SHO, the history how we got to where we are today. For the past several years we have been hearing from many different regulators regarding their concerns about the increase in the level of fails that they are seeing. They believe, and they have stated on numerous occasions, that one of the primary causes of the high level of fails was that various participants in the short sale process, prime brokers, executing brokers, clients, were not following already established rules."
The parallel here between settlement failure abuses and the recent mutual fund late trading fine levied is that both illegal trading practices were being aided by a global clearing operation that was not functioning according to securities laws. For illegal trading to exist, clearing operations had to ignore regulatory responsibilities. Without the aide of such firms the acts would not have continued. For what appears to be a pattern of repeated willingness to violate securities laws, the operation should have been dealt the same fate the SEC deals to the smaller less powerful business operations. Shut it down.
According to the statement above, the Regulators had been identifying to Bear Stearns, over a course of years, that the securities clearing operation was not adequately addressing trades that were not following established laws. Based on this being an issue of settlement failures and illegal shorting practices, this is completely separate from the allegations leading into the recent fine levied against Bear Stearns for aiding the Hedge Funds in late trading practices.
The Captive Regulators [SEC] had knowledge of multiple aiding violations against a major Wall Street clearing operation and walked away with a slap on the wrist and left Bear Stearns with the opportunity to do it again. If only Ken Lay, Dennis Koslowski, and Bernie Ebbers were afforded such luxuries.
It is clear that the present Federal Regulatory Operations had come to a crossroad years back and the SEC chose the wrong path to take. Congress has the option to allow the SEC to continue down this path and bring our Markets and our Nations future to whatever evil lies ahead or, they can step in and re-route this misguided agency.
Over the past several years over $8 Billion in fines have been levied against our major Wall Street Institutions for one violation after another and yet not a single Institution Executive has been personally held accountable. There have been no Ken Lay or Bernie Ebbers like prosecutions for the billions stolen from the Investing public by these firms. Instead the firms take on the appearance of heavy fines that when put to scale are mere slaps on the wrist. The bonus money continues to flow into the pockets of Wall Street executives despite the appearances of heavy fines.
The SEC is now looking into Executive Compensation packages and is looking at Corporate America. Wall Street Institutions are part of Corporate America and certainly the Institutions Executive Compensation packages appear to grow annually off the ill-gotten gains attributed to fraud. Yet, none of these Executives appear damaged by the actions of a business they are paid to lead.
The Securities and Exchange Commission can no longer afford the luxury of simply being the friend of Wall Street. The SEC’s main charter is to protect the investing public from evil and by playing nice with the Institutions the SEC is playing nice with the devil. No Wall Street Institution is really out to protect the small investor. These Institutions are set up as a profit center and work the business to keep the big clients happy. That will include committing illegal acts if it results in a bigger payday as we are repeatedly reminded.
It is time a Special Prosecutor is empowered to look into the conflicts of interest taking place within the walls of the Securities and Exchange Commission.
For more on this issue please visit the Host site at www.investigatethesec.com .
Copyright 2005
An online newspaper reporting the issues of Securities Fraud
Captive Regulator Cowers to Bear Stearns amidst Aiding Violations – December 15, 2005
David Patch
It starts… Bear Stearns Dodges Bullet. The December 15 article by Matt Goldstein of TheStreet.com announces the settlement between Bear Stearns and the Securities and Exchange Commission over the Bear Stearns securities clearing operations participation in covering up the late trading abuses orchestrated by the powerful Hedge Funds.
According to Goldstein, regulators had considered forcing Bear Stearns to sell off all, or a portion, of its big correspondent clearing business but instead elected to fine the firm a paltry $250 Million for aiding in the fraudulent acts. The fine levied equaled nearly 95% of Bear Stearns global clearing operations 4th quarter revenues for 2005.
But what is it about this captive regulator? Why does it appear that the SEC routinely lets the Wall Street criminals and Institutions off lightly as these criminals deceive and cheat the investing public? In this case the $250 Million fine levied against Bear Stearns merely results in a few less millions in bonus checks to the Executives and Management of this firm.
Recall it was only one year ago this week that the General Counsel to Bear Stearns, Bill Philek, opened a Conference Call pertaining to the SEC’s release of Regulation SHO stating:
"To give you that brief introduction in Reg SHO, the history how we got to where we are today. For the past several years we have been hearing from many different regulators regarding their concerns about the increase in the level of fails that they are seeing. They believe, and they have stated on numerous occasions, that one of the primary causes of the high level of fails was that various participants in the short sale process, prime brokers, executing brokers, clients, were not following already established rules."
The parallel here between settlement failure abuses and the recent mutual fund late trading fine levied is that both illegal trading practices were being aided by a global clearing operation that was not functioning according to securities laws. For illegal trading to exist, clearing operations had to ignore regulatory responsibilities. Without the aide of such firms the acts would not have continued. For what appears to be a pattern of repeated willingness to violate securities laws, the operation should have been dealt the same fate the SEC deals to the smaller less powerful business operations. Shut it down.
According to the statement above, the Regulators had been identifying to Bear Stearns, over a course of years, that the securities clearing operation was not adequately addressing trades that were not following established laws. Based on this being an issue of settlement failures and illegal shorting practices, this is completely separate from the allegations leading into the recent fine levied against Bear Stearns for aiding the Hedge Funds in late trading practices.
The Captive Regulators [SEC] had knowledge of multiple aiding violations against a major Wall Street clearing operation and walked away with a slap on the wrist and left Bear Stearns with the opportunity to do it again. If only Ken Lay, Dennis Koslowski, and Bernie Ebbers were afforded such luxuries.
It is clear that the present Federal Regulatory Operations had come to a crossroad years back and the SEC chose the wrong path to take. Congress has the option to allow the SEC to continue down this path and bring our Markets and our Nations future to whatever evil lies ahead or, they can step in and re-route this misguided agency.
Over the past several years over $8 Billion in fines have been levied against our major Wall Street Institutions for one violation after another and yet not a single Institution Executive has been personally held accountable. There have been no Ken Lay or Bernie Ebbers like prosecutions for the billions stolen from the Investing public by these firms. Instead the firms take on the appearance of heavy fines that when put to scale are mere slaps on the wrist. The bonus money continues to flow into the pockets of Wall Street executives despite the appearances of heavy fines.
The SEC is now looking into Executive Compensation packages and is looking at Corporate America. Wall Street Institutions are part of Corporate America and certainly the Institutions Executive Compensation packages appear to grow annually off the ill-gotten gains attributed to fraud. Yet, none of these Executives appear damaged by the actions of a business they are paid to lead.
The Securities and Exchange Commission can no longer afford the luxury of simply being the friend of Wall Street. The SEC’s main charter is to protect the investing public from evil and by playing nice with the Institutions the SEC is playing nice with the devil. No Wall Street Institution is really out to protect the small investor. These Institutions are set up as a profit center and work the business to keep the big clients happy. That will include committing illegal acts if it results in a bigger payday as we are repeatedly reminded.
It is time a Special Prosecutor is empowered to look into the conflicts of interest taking place within the walls of the Securities and Exchange Commission.
For more on this issue please visit the Host site at www.investigatethesec.com .
Copyright 2005