Post by jcline on Dec 5, 2006 18:36:37 GMT -4
STOCKGATE TODAY
An online newspaper reporting the issues of Securities Fraud
Judiciary’s Specter defangs SEC Director – Dec. 5, 2006
David Patch
Today marks a day in which the hunter becomes the hunted.
The Securities and Exchange Commission has typically been thought of as an agency that puts individuals and companies on the hot seat. Today, in Senate Chambers, marked an about face to that climate. Today, members of the Senate Judiciary Committee and former attorney’s at the SEC are questioning the integrity of the SEC enforcement process and those that lead the process.
For the past few months, questions have arisen over the SEC’s handling of an insider trading case involving a politically connected executive of Wall Street. Accusations of cover-up and blocked investigations have surfaced challenging the resolve of the Commission to enforce the securities laws equally across all pedigrees of the investing public.
Regarding this particular case, Pennsylvania Senator Arlen Specter stated, "At best it looks like extraordinarily lax enforcement by the Securities and Exchange Commission ... At worst, it has the overtone of a possible cover-up,"
But the SEC defended their actions in this case using SEC Director of Enforcement Linda Thomsen as the lead spokesman for the team.
In Thomsen’s testimony before the Committee she claimed, “Because an investigation may not lead to an enforcement action, we are always mindful that public disclosures of the mere fact of an SEC investigation may unfairly impugn the reputations of the entities and individuals who conduct may be exonerated. For this reason, as a matter of long standing Commission policy, our investigations are conducted on a confidential basis.”
Thomsen and other SEC staffers, including branch chief Robert Hanson, assistant director Mark Kreitman, and former associate director Paul Berger, addressed the reason behind delaying the questioning of the Wall Street executive as not due to political “juice” but to a process in which the SEC seeks to protect the privacy rights of suspected individuals until such time as all other options have been exercised.
Investors must be protected according to the SEC and that protection comes by way of a slow methodical approach to enforcement.
How truthful that commentary is begs for an investigation all of its own.
Consider if you will going back in time to 2000/2001. Again we are at a Senate Hearing but this time it was with regards to research analyst fraud. At the head of the table sat Senate Banking Chairman Richard Shelby as he berated the SEC for missing the “red flags of abuses” left tattered and faded by the exposure for so long. As the SEC “methodically investigated” and watched the abuse take place, deciding on how to make a case, Wall Street firms were robbing investors across the globe blind leaving only victims in their wake. It took the state of NY, and Attorney General Eliot Spitzer, to expose a problem that was simply being monitored by the agency.
The 2000/2001 research scandal soon became a forgotten memory as new allegations of fraud surfaced with Wall Street again leading the charge. This time Wall Street was involved in illegal market timing and late trading abuses that impacted nearly every investor in our markets. It was again the state regulators that exposed the fraud while the Commission merely monitored the activities in an attempt to understand the problem better before reacting.
It was again the investing public that lay victim to the SEC incompetence in running an investigation. Clearly protecting the rights of potential abusers has certainly become a profit center for the accused while the public foots the bill waiting for corrective measures to take place.
Today the Senate Judiciary Committee saw through this façade put on by the SEC and came out swinging. As the SEC team conducted a character assignation of a potential whistleblower, the Senate took it all in waiting for their opportunity to return volley.
Senator Specter blasted the SEC Director of Enforcement calling the efforts by her team unprofessional and claimed “we are not done here” referring to the Judiciary investigation into how the SEC conducts its business.
Specters comments were followed by those of Senator Grassley who appeared concerned over the personal rights of whistleblowers. Grassley going so far as to suggest legislation may be necessary to preventing any agency from intimidating whistleblowers and allowing any agency to subpoena correspondence with Congressional members regarding the potential wrongdoings.
For me the most disturbing commentary continued to be the remarks regarding privacy rights and why individuals should not be questioned quickly when the SEC has concerns over wrongdoing.
Thomsen claims it is all part of this desire not to impugn the integrity of such individuals but facts do not support her claims. While Thomsen considers the damages an entity or individual may suffer through the exposure of an investigation, it is the SEC that also requires companies to make public such investigations as part of a material event regardless of the SEC policy not to confirm or deny such investigations exist. Thus the damage is merely self-inflicted.
By delaying or completely avoiding the issuance of a subpoena as what transpired in the case in question, individuals and entities can refrain from the disclosure of a material event.
By the end, Thomsen was sent packing with more questions than answers. The fact that a second SEC attorney came forth in this hearing and identified that he too was concerned over the manner in which the SEC staff handled this particular insider trading case should not be lost on anyone.
Calls to the SEC to seek a response to the days drubbing yielded more of that SEC silence Thomsen spoke of earlier. None of the Commission staff or Chairman Cox had a comment on today’s hearings according to John Heine. Instead the Commission is sticking by the testimony of today. Asked why the concerns of a second attorney in the case were not presented, again the SEC had no comments.
We should expect more to come as “the plot grows thicker all the time” according to Senator Specter who closed out the session by simply stating “very very troubling as a minimum” and promised more to come.
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
Judiciary’s Specter defangs SEC Director – Dec. 5, 2006
David Patch
Today marks a day in which the hunter becomes the hunted.
The Securities and Exchange Commission has typically been thought of as an agency that puts individuals and companies on the hot seat. Today, in Senate Chambers, marked an about face to that climate. Today, members of the Senate Judiciary Committee and former attorney’s at the SEC are questioning the integrity of the SEC enforcement process and those that lead the process.
For the past few months, questions have arisen over the SEC’s handling of an insider trading case involving a politically connected executive of Wall Street. Accusations of cover-up and blocked investigations have surfaced challenging the resolve of the Commission to enforce the securities laws equally across all pedigrees of the investing public.
Regarding this particular case, Pennsylvania Senator Arlen Specter stated, "At best it looks like extraordinarily lax enforcement by the Securities and Exchange Commission ... At worst, it has the overtone of a possible cover-up,"
But the SEC defended their actions in this case using SEC Director of Enforcement Linda Thomsen as the lead spokesman for the team.
In Thomsen’s testimony before the Committee she claimed, “Because an investigation may not lead to an enforcement action, we are always mindful that public disclosures of the mere fact of an SEC investigation may unfairly impugn the reputations of the entities and individuals who conduct may be exonerated. For this reason, as a matter of long standing Commission policy, our investigations are conducted on a confidential basis.”
Thomsen and other SEC staffers, including branch chief Robert Hanson, assistant director Mark Kreitman, and former associate director Paul Berger, addressed the reason behind delaying the questioning of the Wall Street executive as not due to political “juice” but to a process in which the SEC seeks to protect the privacy rights of suspected individuals until such time as all other options have been exercised.
Investors must be protected according to the SEC and that protection comes by way of a slow methodical approach to enforcement.
How truthful that commentary is begs for an investigation all of its own.
Consider if you will going back in time to 2000/2001. Again we are at a Senate Hearing but this time it was with regards to research analyst fraud. At the head of the table sat Senate Banking Chairman Richard Shelby as he berated the SEC for missing the “red flags of abuses” left tattered and faded by the exposure for so long. As the SEC “methodically investigated” and watched the abuse take place, deciding on how to make a case, Wall Street firms were robbing investors across the globe blind leaving only victims in their wake. It took the state of NY, and Attorney General Eliot Spitzer, to expose a problem that was simply being monitored by the agency.
The 2000/2001 research scandal soon became a forgotten memory as new allegations of fraud surfaced with Wall Street again leading the charge. This time Wall Street was involved in illegal market timing and late trading abuses that impacted nearly every investor in our markets. It was again the state regulators that exposed the fraud while the Commission merely monitored the activities in an attempt to understand the problem better before reacting.
It was again the investing public that lay victim to the SEC incompetence in running an investigation. Clearly protecting the rights of potential abusers has certainly become a profit center for the accused while the public foots the bill waiting for corrective measures to take place.
Today the Senate Judiciary Committee saw through this façade put on by the SEC and came out swinging. As the SEC team conducted a character assignation of a potential whistleblower, the Senate took it all in waiting for their opportunity to return volley.
Senator Specter blasted the SEC Director of Enforcement calling the efforts by her team unprofessional and claimed “we are not done here” referring to the Judiciary investigation into how the SEC conducts its business.
Specters comments were followed by those of Senator Grassley who appeared concerned over the personal rights of whistleblowers. Grassley going so far as to suggest legislation may be necessary to preventing any agency from intimidating whistleblowers and allowing any agency to subpoena correspondence with Congressional members regarding the potential wrongdoings.
For me the most disturbing commentary continued to be the remarks regarding privacy rights and why individuals should not be questioned quickly when the SEC has concerns over wrongdoing.
Thomsen claims it is all part of this desire not to impugn the integrity of such individuals but facts do not support her claims. While Thomsen considers the damages an entity or individual may suffer through the exposure of an investigation, it is the SEC that also requires companies to make public such investigations as part of a material event regardless of the SEC policy not to confirm or deny such investigations exist. Thus the damage is merely self-inflicted.
By delaying or completely avoiding the issuance of a subpoena as what transpired in the case in question, individuals and entities can refrain from the disclosure of a material event.
By the end, Thomsen was sent packing with more questions than answers. The fact that a second SEC attorney came forth in this hearing and identified that he too was concerned over the manner in which the SEC staff handled this particular insider trading case should not be lost on anyone.
Calls to the SEC to seek a response to the days drubbing yielded more of that SEC silence Thomsen spoke of earlier. None of the Commission staff or Chairman Cox had a comment on today’s hearings according to John Heine. Instead the Commission is sticking by the testimony of today. Asked why the concerns of a second attorney in the case were not presented, again the SEC had no comments.
We should expect more to come as “the plot grows thicker all the time” according to Senator Specter who closed out the session by simply stating “very very troubling as a minimum” and promised more to come.
For more on this issue please visit the Host site at www.investigatethesec.com .
Copyright 2006