How Much More Embarrassment Can The SEC Handle?
The last twelve months or so haven't been kind to the SEC.
First you had the Bernie Madoff report from the SEC's inspector general that outlined, in great detail, the ways in which the agency missed multiple golden opportunities to shut down the infamous fraudster.
Next up was the release of "No One Would Listen: A True Financial Thriller" by Harry Markopolos. Markopolos thoroughly and unapologetically destroyed the SEC in his book, citing numerous occasions in which the agency was furnished with damning evidence against Bernie Madoff but failed to act. Markopolos went out of his way to try to stop the fraud that was being perpetrated against the investors in Madoff's company, but was shooed away and ignored on multiple occasions. Harry's book made the SEC look extremely incompetent and asleep at the wheel when it came to policing the financial markets.
A short time later, the SEC's inspector general released another damning report, this time in the matter of Robert Allen Stanford and his firm, Stanford Group Company. The 159-page report alleged that certain SEC examiners were aware of the fraud at Stanford Group as early as 1997, but that an enforcement action wasn't undertaken against the company because it would have been too "complex to investigate". Instead, easier "quick-hit" cases received the attention of the SEC's Forth Worth Enforcement Division, allowing the fraud at Stanford Group to continue for over 12 years.
Coincidentally (yeah right), the SEC announced their civil lawsuit against Goldman Sachs on the same day that the SEC inspector general's report regarding Stanford Group Company was released. It's funny how nobody is really talking about the Stanford Group report anymore..
As if all of that wasn't enough, reports surfaced earlier this week that the SEC's inspector general had "conducted 33 probes of employees looking at explicit images in the past five years."
31 of the 33 probes "occurred in the 2 1/2 years since the financial system teetered and nearly crashed."
According to this article, one of the probes involved a "senior attorney at the SEC's Washington headquarters" who spent up to "eight hours a day looking at and downloading pornography." The attorney in question eventually agreed to resign.
Seventeen of the employees that were investigated were at a "senior level" and earned as much as $222,418 per year.
Let's be clear - these were SEC employees who were using a government-issued computer to search for porn when they should have been working to protect and police the US financial markets. As if that weren't enough, the majority were high-level employees who were earning princely sums of money every year, courtesy of the US taxpayer.
According to the article, there were two cases in 2007 and 16 in 2008. The near-implosion of the US financial system started in 2008 - were these SEC employees bored by the fact that economy was starting to collapse? Did they need something to pass the time when the likes of Lehman Brothers and Bear Stearns were being incinerated?
The "new" SEC is trying to project a "tougher" image with their recent lawsuit against Goldman Sachs. However, it's kind of hard to take the agency seriously given all of the damage to their credibility that they have sustained over the past number of months.
Filed under: Stock Market Scandals