Post by jcline on Oct 30, 2006 9:29:15 GMT -4
STOCKGATE TODAY
An online newspaper reporting the issues of Securities Fraud
Banking Chair Shelby Continues to Rebuke Peers in Turf War - October 30, 2006
David Patch
Late last week, Senate Banking Committee chairman Richard Shelby (R AL) rebuked fellow Senator Charles Grassley (R IA), chairman of the Senate Finance Committee, over Grassley's public concerns regarding the objectivity of Securities and Exchange Commission enforcement process. Grassley's concerns stem from allegations over recent months that SEC investigations can be stalled or worse, closed out prematurely, when the suspicions of fraud are directed against politically connected individuals.
Shelby, through a banking spokesman, declared "Oversight of SEC enforcement of U.S. securities laws falls entirely under the jurisdiction of the banking committee'' as reported by Bloomberg.
This is not the first time Shelby has rebuked his peers publicly using similar commentary against Judiciary Chairman Arlen Specter (R PA) after Specter held hearings this past summer to discuss the role of the hedge fund in our markets. Specter quickly responded by reminding the banking chairman that the Judiciary Committee has criminal jurisdiction over the capital markets and thus would take all necessary actions to insure criminal activities were not being engaged by the hedge fund industry.
But Shelby has not limited his desire to block regulatory inspections in this arena to public rebukes.
Shelby has also been known to dismiss the concerns of fellow peers within the Banking Committee by routinely blocking all requests by committee members to hold public hearings regarding abusive short selling practices within the markets. One former staffer within the Committee quit after identifying the tension over the issue was too great and too divided. The staffer indicated that to simply inquire about where teh committee stood was enough to get you fired.
The abuses have been so pervasive over the years that while Shelby turned down all Congressional requests for hearings due to his personal belief that the problem did not exist, the SEC in 2005 initiated a reform package to the short selling laws and, barely 18 months later submitted modifications to the new rule change after identifying loopholes for abuse remained.
The exposure to the public of such market abuse concerns regarding this issue have been limited to Senate hearings on the capital markets whereby Utah Senator Robert Bennett has publicly addressed his concerns to the sitting SEC Chairman during these open public hearings. An opportunity Shelby has no control over and thus an opportunity to raise teh public's awareness. Bennett has taken to questioning the SEC Chairmen about abusive short selling in each of these past two years.
Investors, business issuers, and even members of Congress have all begun to wonder privately and publicly what is motivating Shelby to hush the potential conflicts that may exist between the SEC, hedge funds, and the politically connected executives of Wall Street.
Consider for example that Grassley's concerns over possible conflicts between politics and the actions of the SEC are not unfounded but based on documents submitted to the members of Congress by a former SEC Attorney; now turned whistleblower. According to a NY Times the documents, e-Mail communications between the former Attorney and staff of the division of enforcement specifically identify "political clout" and the "juice" of the suspect's attorney as reason to tread cautiously into an investigation.
According to the Times, in possession of copies of the e-Mails, "Mr. Hanson, the S.E.C. branch chief, acknowledged in e-mail messages that he had discussed Mr. Mack's "political clout" and the "juice" of his lawyers with officials at the commission."
And while it appears that Grassley and Shelby both retain copies of these key documents, concern over what the documents may expose rest solely with Grassley. Shelby appears as disinterested in these e-Mail communications as he has appeared disinterested in avoiding the next major market scandal by aggressively getting ahead of the curve.
Shelby remains publicly outspoken in the defense of the hedge fund investing class citing his lack of concern over their role in the public markets. Shelby's concerns are again running divergent to those of his peers and those of the regulatory arm responsible for evaluating such roles in our markets.
Again, it was only a month ago that SEC Director of Enforcement Linda Thomsen spoke before the members of Senate Judiciary Committee and specifically identified the concerns the staff at the commission had over the rise in insider trading allegations. The SEC staff showing most concern over the link between the insider trading rise and hedge funds. Thomsen declaring "there are important areas of concentration we can consider. One such area involves insider trading by hedge funds-an area of significant concern to the Commission, the Enforcement Division, and I know, to this Committee."
According to a Shelby spokesman responding to the GAO inquiry into the SEC, "The chairman [Shelby] does not feel that further regulation of hedge funds is necessary at this time; however the banking committee will continue to conduct vigilant oversight of hedge funds and the overall regulation of U.S. securities markets.'' And while "continue" implies the pre-existence of vigilant oversight, records will show that little oversight by the committee has taken place over the years with most public hearings being orchestrated with a stacked panel of hedge fund defenders and very limited in the topics under evaluation.
With all this suspicion regarding the actions of Senator Shelby, the public can only wonder what his motivations are. How safe can the capital markets be if the top federal regulator is embroiled in a conflict between politics and law enforcement and when the political oversight of this agency is Chaired by a Senator who seems content to block investigations that could lead to an increase in investor protection?
Maybe this will spark some answers.
After the hedge funds were caught cheating the public in the mutual fund late trading scandal, and the SEC initiated an investigation into forcing Hedge Funds to register, Hedge Fund Cerberus pitched to Shelby in political fashion by throwing a fundraiser, netting the senator's leadership PAC $99,500 from Cerberus executives and allies. The PAC's total haul Feb. 17, 2004, the day of the fundraiser, was $217,750. Records make it unclear from Federal Election Commission (FEC) data how much of the non-Cerberus contributions were solicited or bundled by fund executives.
While Shelby is far from alone in raking in money from the financial services industry, Shelby's role as the Chairman of the Senate Banking Committee chair present considerable conflicts for the Senator and his actions to date have not demonstrated a capacity to avoid such conflicts in his decision making process.
In this heightened awareness over the potential disruptions the hedge fund industry can have over our capital markets, and based on the scintillating details of those e-Mail communications by a member of the SEC staff discussing political clout as being a factor in an enforcement investigation, the banking chairman should be the first to react to red flags and yet he is the last. Shelby stands alone, and most vocal holdout against taking any actions to investigate possible political misdeeds.
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
Banking Chair Shelby Continues to Rebuke Peers in Turf War - October 30, 2006
David Patch
Late last week, Senate Banking Committee chairman Richard Shelby (R AL) rebuked fellow Senator Charles Grassley (R IA), chairman of the Senate Finance Committee, over Grassley's public concerns regarding the objectivity of Securities and Exchange Commission enforcement process. Grassley's concerns stem from allegations over recent months that SEC investigations can be stalled or worse, closed out prematurely, when the suspicions of fraud are directed against politically connected individuals.
Shelby, through a banking spokesman, declared "Oversight of SEC enforcement of U.S. securities laws falls entirely under the jurisdiction of the banking committee'' as reported by Bloomberg.
This is not the first time Shelby has rebuked his peers publicly using similar commentary against Judiciary Chairman Arlen Specter (R PA) after Specter held hearings this past summer to discuss the role of the hedge fund in our markets. Specter quickly responded by reminding the banking chairman that the Judiciary Committee has criminal jurisdiction over the capital markets and thus would take all necessary actions to insure criminal activities were not being engaged by the hedge fund industry.
But Shelby has not limited his desire to block regulatory inspections in this arena to public rebukes.
Shelby has also been known to dismiss the concerns of fellow peers within the Banking Committee by routinely blocking all requests by committee members to hold public hearings regarding abusive short selling practices within the markets. One former staffer within the Committee quit after identifying the tension over the issue was too great and too divided. The staffer indicated that to simply inquire about where teh committee stood was enough to get you fired.
The abuses have been so pervasive over the years that while Shelby turned down all Congressional requests for hearings due to his personal belief that the problem did not exist, the SEC in 2005 initiated a reform package to the short selling laws and, barely 18 months later submitted modifications to the new rule change after identifying loopholes for abuse remained.
The exposure to the public of such market abuse concerns regarding this issue have been limited to Senate hearings on the capital markets whereby Utah Senator Robert Bennett has publicly addressed his concerns to the sitting SEC Chairman during these open public hearings. An opportunity Shelby has no control over and thus an opportunity to raise teh public's awareness. Bennett has taken to questioning the SEC Chairmen about abusive short selling in each of these past two years.
Investors, business issuers, and even members of Congress have all begun to wonder privately and publicly what is motivating Shelby to hush the potential conflicts that may exist between the SEC, hedge funds, and the politically connected executives of Wall Street.
Consider for example that Grassley's concerns over possible conflicts between politics and the actions of the SEC are not unfounded but based on documents submitted to the members of Congress by a former SEC Attorney; now turned whistleblower. According to a NY Times the documents, e-Mail communications between the former Attorney and staff of the division of enforcement specifically identify "political clout" and the "juice" of the suspect's attorney as reason to tread cautiously into an investigation.
According to the Times, in possession of copies of the e-Mails, "Mr. Hanson, the S.E.C. branch chief, acknowledged in e-mail messages that he had discussed Mr. Mack's "political clout" and the "juice" of his lawyers with officials at the commission."
And while it appears that Grassley and Shelby both retain copies of these key documents, concern over what the documents may expose rest solely with Grassley. Shelby appears as disinterested in these e-Mail communications as he has appeared disinterested in avoiding the next major market scandal by aggressively getting ahead of the curve.
Shelby remains publicly outspoken in the defense of the hedge fund investing class citing his lack of concern over their role in the public markets. Shelby's concerns are again running divergent to those of his peers and those of the regulatory arm responsible for evaluating such roles in our markets.
Again, it was only a month ago that SEC Director of Enforcement Linda Thomsen spoke before the members of Senate Judiciary Committee and specifically identified the concerns the staff at the commission had over the rise in insider trading allegations. The SEC staff showing most concern over the link between the insider trading rise and hedge funds. Thomsen declaring "there are important areas of concentration we can consider. One such area involves insider trading by hedge funds-an area of significant concern to the Commission, the Enforcement Division, and I know, to this Committee."
According to a Shelby spokesman responding to the GAO inquiry into the SEC, "The chairman [Shelby] does not feel that further regulation of hedge funds is necessary at this time; however the banking committee will continue to conduct vigilant oversight of hedge funds and the overall regulation of U.S. securities markets.'' And while "continue" implies the pre-existence of vigilant oversight, records will show that little oversight by the committee has taken place over the years with most public hearings being orchestrated with a stacked panel of hedge fund defenders and very limited in the topics under evaluation.
With all this suspicion regarding the actions of Senator Shelby, the public can only wonder what his motivations are. How safe can the capital markets be if the top federal regulator is embroiled in a conflict between politics and law enforcement and when the political oversight of this agency is Chaired by a Senator who seems content to block investigations that could lead to an increase in investor protection?
Maybe this will spark some answers.
After the hedge funds were caught cheating the public in the mutual fund late trading scandal, and the SEC initiated an investigation into forcing Hedge Funds to register, Hedge Fund Cerberus pitched to Shelby in political fashion by throwing a fundraiser, netting the senator's leadership PAC $99,500 from Cerberus executives and allies. The PAC's total haul Feb. 17, 2004, the day of the fundraiser, was $217,750. Records make it unclear from Federal Election Commission (FEC) data how much of the non-Cerberus contributions were solicited or bundled by fund executives.
While Shelby is far from alone in raking in money from the financial services industry, Shelby's role as the Chairman of the Senate Banking Committee chair present considerable conflicts for the Senator and his actions to date have not demonstrated a capacity to avoid such conflicts in his decision making process.
In this heightened awareness over the potential disruptions the hedge fund industry can have over our capital markets, and based on the scintillating details of those e-Mail communications by a member of the SEC staff discussing political clout as being a factor in an enforcement investigation, the banking chairman should be the first to react to red flags and yet he is the last. Shelby stands alone, and most vocal holdout against taking any actions to investigate possible political misdeeds.
For more on this issue please visit the Host site at www.investigatethesec.com .
Copyright 2006