The SEC tends to come in for a lot of good-natured joshing around here, and elsewhere, for amusing foibles like spending their days surfing porn, ignoring multibillion dollar Ponzi schemes when they’re told about them directly, and complaining bitterly when anyone suggests that their priorities might be misplaced. Also on some people’s complaint list is that the SEC tends to be heavy on lawyers and light on forensic accountants, economists, traders, quants, and just generally anyone who might have a glancing familiarity with things financial.
But credit where it’s due: the SEC has gotten a bit better at using market mechanisms to find the next big, or little, or whatever fraud. This week has seen a spate of stories about how the SEC, and the Feds generally, are using new and existing whistleblower programs to encourage people to come to them first if they have negative information to peddle. The headliner is Grant Wilson, who new-best-friend-of-the-SEC Harry Markopolos recruited to expose some currency trading unpleasantness at his former employer BoNY Mellon, but others seem to be in the SEC’s pipeline.
More intriguingly, though, the SEC is doing a great job at shutting down its competition. Continue reading »
The SEC is well aware that everyone thinks its failure to stop Bernie Madoff’s ponzi scheme was pretty weak. After all, Harry Markopolos told them about it for years and they did nothing. But it turns out there’s a pretty innocent explanation: when Markopolos would call the SEC, they didn’t have a pen handy so they couldn’t write down what he told them. This happened all the time and was generally viewed within the agency as not a big deal.
Tips used to come via phone calls, e-mails, faxes and even handwritten letters into the SEC’s 11 regional offices and Washington headquarters. Before the Madoff case, the SEC’s Los Angeles office might receive a written complaint about a bad broker, for instance, and stuff the letter into a filing cabinet if it was deemed without merit. So, if later on a complaint about the same broker was sent to the SEC’s Chicago office, staff there would have no easy way of knowing about the earlier tip and connecting the dots.
Now? They’ve got a shiny new database. And their treatment of people who do their job for them has never been better: Continue reading »
If anyone out there is considering starting a hedge fund, there’s a few things you should know. Don’t want to scare anyone but…okay we’re just going to come out and say it- according to reports, “gone are the days when a trader could leave some Wall Street firm with a few of his buddies, snap his fingers and raise several hundred million dollars overnight.” Now, you might have to spend six months to a year raising money and not only that? You’re going to have to make it through several rounds of due diligence by potential investors. You may also have to come face to face with a guy named Neil Chelo who some people (Neil) like to call The Enforcer. Continue reading »
Log on to ladyboyjuice.com 348 times in one day? Yes. That, they’ve got a handle on. Words and stuff? Marko’s not yet convinced. (Yet another reason these people must die.)
Not so much because Bernie was a crook ruining the lives of thousands of people, Kevin Bacon included, but because Markopolos was just so damn fed up with the idiots running the Securities and Exchange Commission. So it was kind of perfect, see, because a) Berns really did need to go down for the dirt nap and b) should there be a trial, he had the perfect out. You can blame the SEC for practically anything, you know.
[In his new book] Markopolos wields a bludgeon when it comes to the Securities and Exchange Commission, which effectively ignored his several complaints about Madoff, even after he provided the agency with detailed files of his findings. He goes into detail to describe his frustrating encounters with SEC employees, who usually didn’t understand what he was talking about. And he even places ultimate blame with the agency if anything dangerous happened to him or Madoff:
In one of the book’s most startling passages, Markopolos reveals that if he felt threatened, he was prepared to kill Madoff himself:
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As we wrote yesterday, Harry Markopolos has a book hitting the shelves next week. But, as Marko is realizing, the price of fame is high and calling Madoff the “lowest form of scum” can be hazardous. He now has to wear more disguises (mostly wigs) and is afraid for his safety. But he is “crazy-brave” and lemons-lemonade, he’s now being asked to look into the Kennedy assassination, so not all’s bad. Harry has some regrets however, and wishes he’d handled things in a different way, especially when it comes to Spitzer.
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“They’re a bunch of idiots” the Whistleblower-in-Chief told New York Times magazine, demonstrating commendable restraint in not calling them “retards.” In related news, Marko’s book, No One Would Listen: A True Financial Thriller, co-written by hedge fund manager-cum-auteur David Einhorn, is hitting shelves next week. A signed copy is being sent Bernie’s way as we speak.
Hey hey future Harry Markopoloses (Markopoloi?) of the world: the SEC wants to hear from you! Really! For serious! Yes, it’s true, back in the day (as recently as a year-ish or so ago), your kind was not welcome at the Securities and Exchange Commission. They would’ve told you to fuck off, get bent, S a D and so on and so forth.
Continue reading »
We suspect that when Harry Markopolis called FINRA “corrupt,” he at least seems to have hit the nail on the head:
Two employees of Allen Stanford’s financial business, which U.S. regulators have accused of massive fraud, held advisory roles at a watchdog group overseeing U.S. broker-dealers aimed at preventing abuses.
Lena Stinson, director of global compliance at Stanford Financial Group, is listed as serving on the membership committee of the Financial Industry Regulatory Authority, or FINRA, which describes itself as the largest independent regulator of U.S. securities firms.
Frederick Fram, the chief operating officer of Stanford Group Holdings, serves on the FINRA continuing education content committee, “where he participates in creating material for the Regulatory Element continuing education program,” according to a biography on Stanford’s website.
Entertaining. Of course, don’t forget:
On Tuesday, FINRA named Richard Ketchum as its chief executive officer. He replaces Mary Schapiro, who resigned after she was confirmed as chairman of the U.S. Securities and Exchange Commission.
Stanford workers have ties to regulator FINRA [Reuters]
True, most financial professionals would be bragging non-stop on CNBC for months after having sent two ignored tips to the SEC about Bernie Madoff, particularly since the analysis was spot-fucking-on. Not, however, Harry Markopolos.
After a decade of trying to convince U.S. authorities that Bernard Madoff’s seemingly high-flying hedge fund was a scam, the man whose warnings could have saved a lot of money for a lot of people issued a terse message to the world: Leave me alone.
He will talk to Congressional investigators and that’s it.
We know its been popular in Dealbreaker circles to predict who will play Markopolos too. Nix that idea forthwith.
The Boston Globe reported that he has been approached by people interested in making a movie about him, but he has rebuffed all overtures.
“They’ll just add in sex and violence,” the Globe quoted Markopolos as saying.
We’d like to do a sock puppet production, but Harry won’t return our calls either.
Madoff whistleblower wants to be left alone [Reuters]
