Obama’s revolving door--FINRA and SEC

I've written about Mary Shapiro before. There is no hope for change when the fox guards the henhouse. We'll continue to have the Bernie Madoff and "Sir" Allen Stanford scandals and ponzi schemes.

"Markopolos and the subcommittee members devoted much time to laying out the multitudinous and egregious failures of the SEC with respect to Madoff. During the questioning, Markopolos was asked his opinion of another regulatory entity that is supposed to be overseeing and policing the activities of a segment of the financial services industry—broker/dealers. This one is called the Financial Industry Regulatory Authority (FINRA). It is a non-governmental organization run by the broker/dealers (think: fox watching the henhouse), empowered by the U.S. Congress to do so. Its powers include arbitrating disputes between customers and their broker-dealer members, since aggrieved customers are not usually permitted access to the courts. Supposedly, the U.S. Congress oversees FINRA activities.

Now, Markopolos was asked to compare the SEC and FINRA. His answer was short and pithy: the SEC is incompetent; FINRA is corrupt.

President Obama had appointed one Mary Shaprio to be the new head of the SEC, replacing the clueless Christopher Cox. I also knew that Mary Shapiro's previous job was head of FINRA, where she was paid approximately $3 million per year, plus another $5-$25 million reward for her FINRA exit. So, we have here the chief of a corrupt regulatory body, being appointed to clean house at an incompetent regulatory body. She was unanimously confirmed by the U.S. Senate." Bob Gilbert quoted at Maggie’s Notebook

Scatological and Eschatological

One means obscene--particularly words dealing with excrement, and the other means biblical, "end of the world" and "the last judgment." When people opened the Wall Street Journal and read the front page story about a man named Markopolos who had been warning the SEC about Bernard Madoff for NINE years, there were probably a few choice words both obscene and theological that spewed over the coffee cup. All I said was, "WOW." I don't swear or use the F-word, but if I did, this would have been the day to let loose.

"Securities and Exchange Commission investigators discovered in 2006 that Bernard Madoff had misled the agency about how he managed customer money, according to documents, yet the SEC missed an opportunity to uncover an alleged Ponzi scheme.

The documents indicate the agency had Mr. Madoff in its sights amid multiple violations that, if pursued, could have blown open his alleged multibillion-dollar scam. Instead, his firm registered as an investment adviser, at the agency's request, and the public got no word of the violations.

Harry Markopolos -- who once worked for a Madoff rival -- sparked the probe with his nearly decadelong ..."

So what were their excuses, both the SEC watchdogs and the media watchdogs? Well, it seems we had a bunch of yapping Chihuahuas guarding a pit bull.

No definitive evidence [that's your job--to find it]

Could have been a vendetta [isn't that what they said about the John Edwards' mistress story and bloggers finding the phony CBS Bush documents?]

Occasionally he got facts and dates wrong [like you never do!]

"Once" he misstated a date [sometimes I mix up my kids' birthdates--that doesn't mean they weren't born]

So "Marco Polo" discovers the guy who "Made Off" with the funds and trust of thousands of investors and charities all over the world, and the Security and Exchange Commission headed by Christopher Cox (former Republican congressman appointed by Bush) with a budget of $900 million a year and an enforcement staff a third larger than it was in 2000 can't even follow up on nine years of tips. I think once Cox falls on his sword and takes the blame, this item will be removed from the SEC page.

During his tenure at the SEC, Chairman Cox has made vigorous enforcement of the securities laws the agency's top priority, bringing ground breaking cases against a variety of market abuses including hedge fund insider trading, stock options backdating, fraud aimed at senior citizens, municipal securities fraud, and securities scams on the Internet.

And then there is FINRA, which WSJ says has an even bigger budget than SEC.

"Then there's the Financial Industry Regulatory Authority (FINRA), a "self-regulatory organization" funded by industry. Its 3,000 employees ride herd on the brokerage industry, and these private cops are armed with an even bigger budget than the SEC. FINRA doesn't disclose tips and complaints when they don't result in enforcement action, so we can't know for sure whether FINRA was contacted about the alleged Ponzi scheme." To catch a thief

I realize the op ed page and the news pages of WSJ are different--one conservative the other the most liberal of all news sources in the USA--but just maybe if the journalists hadn't been chasing every positive story they could find about Obama, they just might have turned up this one.