Post by jcline on Jun 12, 2006 19:04:32 GMT -4
STOCKGATE TODAY
An online newspaper reporting the issues of Securities Fraud
SEC and Wall Street, Who really is in charge? June 12, 2006
David Patch
Clearly the past few years have provided enough insight into how behind the times the Securities and Exchange Commission is. With each passing scandal that comes before us we hear such adjectives as complacent, ill-informed, and lifeless describe the agency. New York Attorney General Eliot Spitzer routinely summed up the SEC’s performance by qualifying the SEC as being nothing short of “asleep at the switch.” In the years that have passed since Spitzer first declared this perception, many of us have wondered how this Federal Agency could be so far off base with their responsibilities.
Today, I believe a small sign of the root problem surfaced. The issue is not simply rooted to the corruption of those that work the markets, it is not the greed of those who can never have enough, and it is not even the naiveté of the investing public, it is an organization problem. The root to our demise is and will remain a “whose in charge” problem.
For the past few weeks members of the media and the public have been in contact with the SEC seeking a response to the recent changes in securities law out of the state of Utah. For those unaware, Utah recently passed an extension of the SEC's short selling reform Regulation SHO, passed in June 2004, and incorporated in January 2005, where Utah requires broker-dealers to provide regulators specific market insight on trade executed fails to deliver for all Utah based companies published on Regulation SHO's threshold security list.
Each call requesting comment by the SEC on the Utah law has been forwarded to John Heine of the Office of Public Affairs where Heine simply responds with a no comment.
So it should not have come as a surprise when I was provided an agenda for the June 14 SIA Conference in New York City and saw that the SEC will have a spokesman from the Division of Market Regulation who will address the very law the SEC refuses to comment on to members of the financial press and to the public.
On the panel to discuss Hedge Funds and the Prime Brokerage Community will be the SEC's assistant Director of Market Regulation James Brigagliano. The agenda for this panel will be to address "the current issues in the prime brokerage industry, including pending revisions to the SEC Prime Brokerage No-Action Letter, current and proposed interpretations of Regulation SHO, and recent state legislation regarding settlement fails."
Also on the Panel for this discussion is none other than Bear Stearns General Counsel William Freilich. Of significance here is that it was Bill Freilich, in a December 2004 Bear Stearns Conference Call, that uttered this infamous preamble into a discussion regarding Regulation SHO.
"To give you that brief introduction in Reg SHO, the history (of) how we got to where we are today. For the past few 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."
With Brigagliano on this panel to discuss the Utah law, I once again contacted the SEC for comment regarding the SEC’s position. John Heine again responded, as he had done in the past, with a “no-comment” but this time stated "last time I talked to Mr. Brigagliano he had no comment on the subject.” Ironically, it was not Mr. Brigagliano’s opinion I sought comment of but that of the Commission and the Commission Staff and as far as I can tell Brigagliano does not speak for the Commission staff.
Apparently the SEC's position on open and full disclosure does not apply to the agency itself as Mr. Brigagliano is on the agenda to discuss the Utah law with the members of the industry but continues to deny similar access to such information to the general public. With this being a panel discussion, the comments made by Brigagliano will not be part of public record and will not be documented on the SEC website. Instead, only those members of the industry or those willing to fork over $1000 to attend will hear what the SEC has to say about the new laws passed in Utah.
Why is this issue critical to the future success of the SEC?
If you put into context the statement made by Bill Freilich back in December 2004, it appears that the SEC has routinely sought out the advice of those within the industry that are directly involved in the securities violations. As market issues are becoming apparent, the SEC clearly seeks out the approval of those involved in cheating the investing public as the sounding board to consider interpretation and guidance on securities related laws. Freilich came right out and admitted that conversations with many regulators identified securities violations that had been in play for years and yet the SEC tailored the new laws to insure that those involved in the violations would be protected.
So who works for whom?
The SEC appears to be the subordinate in this equation seeking out the guidance of the very members they are tasked to regulate. In conversations with an aide to the House Financial Services Committee it appears that even when Congress provides recommendations to the SEC those too are ignored if those opinions are against the will and desires of the member firms. The House informed the SEC that the “grandfather clause of Regulation SHO “makes no sense” and yet here we are, with a grandfather clause that benefited the firms carrying the financial liability of a failure to deliver. Wall Street!
With the SIA conference quickly approaching and no word from the SEC on what will be presented to the member firms, the investing public is left to question the overall resolve of Chairman Cox and the Commissioners to right this sinking ship. Certainly meeting such as this, designed to kowtow with the hedge Fund industry only has one potential outcome, continued manipulation, and decline of our public markets.
The SEC has much to answer for and it begins with the blatant conflict of interest with the members of Wall Street. The SEC cannot continue to take on the role of subordinate to Wall Street and expect our markets and the investor confidence in these markets to develop.
As for Mr. Brigagliano, the evidence is out there where he personally signed off on the dissemination of false and misleading information to a member of the SEC Oversight Committee of Congress regarding this very issue of illegal shorting abuses and settlement failures. Today we find out that Mr. Brigagliano is also willing to speak to the member firms in private on an issue he refuses to address at the public level on behalf of the SEC.
Chairman Cox, the ball is in your court. Are you ready to right the ship or continue the destruction of our markets?
Personally, I believe it is time to www.Investigatethesec.com and I know where and who I would start with.
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
SEC and Wall Street, Who really is in charge? June 12, 2006
David Patch
Clearly the past few years have provided enough insight into how behind the times the Securities and Exchange Commission is. With each passing scandal that comes before us we hear such adjectives as complacent, ill-informed, and lifeless describe the agency. New York Attorney General Eliot Spitzer routinely summed up the SEC’s performance by qualifying the SEC as being nothing short of “asleep at the switch.” In the years that have passed since Spitzer first declared this perception, many of us have wondered how this Federal Agency could be so far off base with their responsibilities.
Today, I believe a small sign of the root problem surfaced. The issue is not simply rooted to the corruption of those that work the markets, it is not the greed of those who can never have enough, and it is not even the naiveté of the investing public, it is an organization problem. The root to our demise is and will remain a “whose in charge” problem.
For the past few weeks members of the media and the public have been in contact with the SEC seeking a response to the recent changes in securities law out of the state of Utah. For those unaware, Utah recently passed an extension of the SEC's short selling reform Regulation SHO, passed in June 2004, and incorporated in January 2005, where Utah requires broker-dealers to provide regulators specific market insight on trade executed fails to deliver for all Utah based companies published on Regulation SHO's threshold security list.
Each call requesting comment by the SEC on the Utah law has been forwarded to John Heine of the Office of Public Affairs where Heine simply responds with a no comment.
So it should not have come as a surprise when I was provided an agenda for the June 14 SIA Conference in New York City and saw that the SEC will have a spokesman from the Division of Market Regulation who will address the very law the SEC refuses to comment on to members of the financial press and to the public.
On the panel to discuss Hedge Funds and the Prime Brokerage Community will be the SEC's assistant Director of Market Regulation James Brigagliano. The agenda for this panel will be to address "the current issues in the prime brokerage industry, including pending revisions to the SEC Prime Brokerage No-Action Letter, current and proposed interpretations of Regulation SHO, and recent state legislation regarding settlement fails."
Also on the Panel for this discussion is none other than Bear Stearns General Counsel William Freilich. Of significance here is that it was Bill Freilich, in a December 2004 Bear Stearns Conference Call, that uttered this infamous preamble into a discussion regarding Regulation SHO.
"To give you that brief introduction in Reg SHO, the history (of) how we got to where we are today. For the past few 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."
With Brigagliano on this panel to discuss the Utah law, I once again contacted the SEC for comment regarding the SEC’s position. John Heine again responded, as he had done in the past, with a “no-comment” but this time stated "last time I talked to Mr. Brigagliano he had no comment on the subject.” Ironically, it was not Mr. Brigagliano’s opinion I sought comment of but that of the Commission and the Commission Staff and as far as I can tell Brigagliano does not speak for the Commission staff.
Apparently the SEC's position on open and full disclosure does not apply to the agency itself as Mr. Brigagliano is on the agenda to discuss the Utah law with the members of the industry but continues to deny similar access to such information to the general public. With this being a panel discussion, the comments made by Brigagliano will not be part of public record and will not be documented on the SEC website. Instead, only those members of the industry or those willing to fork over $1000 to attend will hear what the SEC has to say about the new laws passed in Utah.
Why is this issue critical to the future success of the SEC?
If you put into context the statement made by Bill Freilich back in December 2004, it appears that the SEC has routinely sought out the advice of those within the industry that are directly involved in the securities violations. As market issues are becoming apparent, the SEC clearly seeks out the approval of those involved in cheating the investing public as the sounding board to consider interpretation and guidance on securities related laws. Freilich came right out and admitted that conversations with many regulators identified securities violations that had been in play for years and yet the SEC tailored the new laws to insure that those involved in the violations would be protected.
So who works for whom?
The SEC appears to be the subordinate in this equation seeking out the guidance of the very members they are tasked to regulate. In conversations with an aide to the House Financial Services Committee it appears that even when Congress provides recommendations to the SEC those too are ignored if those opinions are against the will and desires of the member firms. The House informed the SEC that the “grandfather clause of Regulation SHO “makes no sense” and yet here we are, with a grandfather clause that benefited the firms carrying the financial liability of a failure to deliver. Wall Street!
With the SIA conference quickly approaching and no word from the SEC on what will be presented to the member firms, the investing public is left to question the overall resolve of Chairman Cox and the Commissioners to right this sinking ship. Certainly meeting such as this, designed to kowtow with the hedge Fund industry only has one potential outcome, continued manipulation, and decline of our public markets.
The SEC has much to answer for and it begins with the blatant conflict of interest with the members of Wall Street. The SEC cannot continue to take on the role of subordinate to Wall Street and expect our markets and the investor confidence in these markets to develop.
As for Mr. Brigagliano, the evidence is out there where he personally signed off on the dissemination of false and misleading information to a member of the SEC Oversight Committee of Congress regarding this very issue of illegal shorting abuses and settlement failures. Today we find out that Mr. Brigagliano is also willing to speak to the member firms in private on an issue he refuses to address at the public level on behalf of the SEC.
Chairman Cox, the ball is in your court. Are you ready to right the ship or continue the destruction of our markets?
Personally, I believe it is time to www.Investigatethesec.com and I know where and who I would start with.
For more on this issue please visit the Host site at www.investigatethesec.com .
Copyright 2006