The Securities and Exchange Commission has taken the decades-old, stereotypical criticism of useless federal government regulators and owned it. Time and time again the agency has chosen not to enforce rules against the most powerful institutions, has turned a blind eye as the institutions continue fraudulent behavior and has codified the injustice of an economically-elite and politically-connected class of institutions not being held accountable to the law. At the same time that the Securities and Exchange Commission is not prosecuting the big whales, the agency is aggressively pursuing the small fry with regulatory violations. The general population of the American citizenry is observing a no-win outcome of this agency’s strategy. The taxpayers are paying for the failures of these powerful institutions, the taxpayers are suffering from the economic crisis caused by these powerful institutions, the taxpayers are funding the $1.321 Billion budget of the SEC and those taxpayers who engage in small-middle size business opportunities in this industry are paying dearly for minor regulatory violations. This agency, quite frankly, is actively impeding the potentially bright economic future of our nation.
A few highlights from this SEC-sponsored horror show includes:
- Failure to prosecute Fuld, CEO of Lehman Brothers, after Budde, former Lehman Brothers associate general counsel, provided documentation that he lied under oath about hiding hundreds of millions in compensation.
- Failure to prosecute Lehman Brothers after Anton Valukas submitted a 2,200 page report stating that there was enough evidence for a prosecutor to bring a case against top Lehman officials and the Ernst & Young accounting firm for misleading government regulators and investors.
- Failure to prosecute Moody’s after a March 2009 letter sent by Moody’s former senior vice president of compliance.
- Failure to prosecute mortgage fraud after FBI publicly declares “epidemic” in 2004.
- Failure to prosecute Chase on fraudulent credit card practices after whistleblower in 2010.
- Failure to prosecute Citibank on fraudulent mortgages after whistleblower in 2011.
- Failure to prosecute Stanford Financial Group on Ponzi scheme after whistleblower in 2003.
- Failure to prosecute Countrywide Financial for mortgage fraud after whistleblower in 2007.
- Failure to prosecute Bernard Madoff for the ponzi scheme after repeated whistleblowers.
- Failure to prosecute JPMorgan Chase on illegal trading after whistleblower in 2004.
Clearly the lack of prosecution by the SEC and failure to uphold “justice for all” has resulted in a permanent behavior of fraud by powerful companies. Comically, the New York Times even reported the most frequent “repeat” offenders receiving slaps on the wrist by the SEC:
American International Group, Ameriprise, Bank of America, Bear Stearns, Columbia Management, Deutsche Asset Management, Credit Suisse, Goldman Sachs, JPMorgan Chase, Merrill Lynch, Morgan Stanley, Putnam Investments, Raymond James, RBC Dain Rauscher, UBS and Wells Fargo/Wachovia.
The SEC is spending the $1.321 Billion in resources to prosecute small fry for violations such as registration revocations – these are failed public companies that let their registration paperwork lapse. In 2011, the SEC attacked 121 small fry for these delinquent filings.
Where is the leadership to establish the priorities for this failed agency? Our economic future depends on focusing on the real problems with our financial industry. At this point we are held hostage not only by the too-big-to-fail institutions, but also, by the utterly useless federal government law enforcers like the Securities and Exchange Commission.