It's tough to be the Securities & Exchange Commission these days. The Treasury Department and the Federal Reserve have been encroaching on the SEC's turf, leaving many to question what role the SEC will have in the future. And lately New York State Attorney General Andrew Cuomo has been taking the lead in the "investor protection" business by negotiating settlements with Wall Street firms who sold customers auction rate securities.
Now it seems the SEC is fighting back. Andrew Cuomo is just now making an announcement of a settlement with Morgan Stanley and JP Morgan Chase, with the two firms agreeing to pay fines and buy the frozen auction rate securities back from customers. Along side him is a representative from the National Association of State Securities Dealers. Absent was a representative from the SEC.
Charlie Gasparinio just reported on CNBC that the SEC is not participating in this settlement, and its investigation is ongoing. It seems that the SEC balked at being lead into this settlement by Cuomo.
Cuomo emphasized that he believes his settlement is a "service to the entire market." He never mentioned the SEC in his press conference.
Posted by guest , Aug 14, 2008 12:01PM
The SEC needs to be gutted of its current leadership and rebuilt with outsiders. Of all of the "scandals" that have come to light over the past 15 years, most (if not all) were well known to the SEC and totally ignored. Even today, the SEC is well aware of activities that are unlawful as well as illegal, yet they choose not to enforce existing rules, regulations and laws.
Why is the SEC such a worthless enforcement agency? Primarily, it is beholden to Congressmen and Senators who receive enormous sums of money from financial and business interests. If the SEC had cracked down on Wall Street for playing games with analyst ratings during the internet boom, untold businessmen would have come running to their elected representatives in D.C. claiming no one was getting hurt and the SEC would have incurred the wrath of Capitol Hill. Ditto the auction rate situation, the ratings agencies, etc.
The SEC knows what is going on because people complain to them all the time. The SEC makes a political calculation as the whether the offender is a small fish that can be gutted, if the offender is a large interest committing relatively benign violations (take a look into unclaimed property corporations and banks silently move from sight and off their balance sheets as opposed to escheat) or is an entity that would give political capital to some elected official on Capitol Hill.
In the end, corporate interests know it pays to play games and the SEC only steps up to deal with the actions of larger players after the fact, leaving us will all the costs and none of the benefits of regulation (Sarbanes Oxley).
Posted by guest , Aug 14, 2008 12:10PM
"Cuomo"
... Stopped reading right there.
Posted by arthurcutten , Aug 14, 2008 12:21PM
Speaking of how corporate interests know how it pays to play games, most US Companies Pay No Income Tax.
http://tiny.cc/0aXZu
Posted by guest , Aug 14, 2008 12:28PM
#3,
Yea, and one company (Exxon) will pay more in income taxes this year (both here and outside the U.S.) than the entire bottom 50% of American individual taxpayers (about 67 million) will pay in income taxes this year.
So what?
Posted by Joseph di Jersey City , Aug 14, 2008 12:48PM
3: This is largely because so many companies are pass through entities and their taxes are paid as individual income tax. This was explained in the original article but nice try anyway.
Posted by guest , Aug 16, 2008 6:41PM
Not long enough - read twice.
Posted by guest , Aug 16, 2008 6:48PM
Comment #1 is right on! Schumer runs interference for the IBanks with the SEC in exchange for PAC money. And look what happened when Gary Aguirre tried to depose Mack? He got tossed by the SEC who then covered it all up. Linda Thomsen basically perjured herself in front of Congress (unless you believe Mary Jo White lied to her partners in email about what Thomsen told her!)
The SEC is a joke. They should be disbanded. Thank god for the NY Attorney General who gets to wield the Martin Act. Looks like Cuomo finally grew a pair!