Wednesday, September 12, 2007

A Gross Injustice

"A federal court in Manhattan ordered former Kidder Peabody bond trader Orlando Joseph Jett to hand over more than $8.4 million sought by the [SEC] in 2004", WSJ, 12 September.

This is a gross miscarriage of justice. Jett supposedly perpetrated a $22 billion securities fraud at Kidder in about 1994. Singlehandedly. $22 billion? Supposedly he mispriced US Treasuries Kidder held and overstated Kidder's income by $335 milliion. How? Wasn't Kidder part of GE? Don't GE and Kidder have internal auditors, KPMG audits, etc.? How did Jett do this? He had Kidder report the security values in accordance with Kidder's policies. What was KMPG looking at if it didn't test the security pricing? Who knows?

Jett challenged then US Attorney for the Southern District of NY, Mary Jo White (MJW) to indict him. The indictment never happened. Why didn't MJW indict Jett? My opinion: she knew she had no credible evidence against him. I concluded the case against Jett was preposterous. This didn't stop the SEC from bringing civil charges against him in its own "Kangaroo Court" adminstrative proceedings and fining him. This is why we need jury trials. By the way, I think Jett would make an excellent Secretary of State. He's even Black!

MJW? Haven't we seen that name recently? See my 10 August post. Apparently MJW knows which side her bread is buttered on and knew it when she refused to charge anyone at GE with committing the "fraud". I'm sure it looked good on her resume. By not charging anyone "important" at GE with anything she becomes a partner in a large NY law firm and gets to represent Morgan Stanley today. Very nice. This is the classical agency problem again.

No comments: