SEC as Idiot

"David Einhorn's hedge fund isn't the biggest. He doesn't usually badger companies, nor does he broadcast his opinions about the market. Still, Mr. Einhorn is emerging as one of the most public faces of an industry accused of reticence and secrecy. While not known for being overly critical of companies, the 39-year-old manager of Greenlight Capital has lambasted credit-rating firms and bond insurers at events in recent months before hundreds of investors. ... Now, Mr. Einhorn is ramping up his effort to combat what he sees as deep-rooted problems undercutting the financial system: He is ripping regulators, Congress, auditors, boards of directors and investigative reporters in 'Fooling Some of the People All of the Time,' his new book. ... 'Who works at these government agencies that are so uncaring about the misuse of taxpayer money?' he asks in the book. He asserts that regulators have an 'indifferent attitude' towards wrongdoing. ... Einhorn, who found himself investigated by the [SEC] after he criticized Allied, is hoping to put pressure on regulators and others to more thoroughly scrutinize companies. He is also hoping to pursuade the SEC, which he accuses of going easy on Allied, to levy larger penalties on companies that commit financial misdeeds. 'The SEC is run by a corporate advocate, not an investor advocate, so investors are getting a false sense of security,' Mr. Einhorn says in an interview. ... An SEC spokesman wouldn't confirm that the agency in the past investigated Mr. Einhorn or comment on the Allied situation", my emphasis, WSJ, 28 April 2008.

Einhorn is going easy on the SEC. If it only was "indifferent" to wrongdoing. I think the SEC tries to conceal it if done by the politically well-connected. It would be interesting for the SEC to study where each of its attorneys who left in say the last 10 years went to work. I would be curious to see how many went to work for the securities plaintiffs' bar. The penalties the SEC usually levies on companies are insignificant. The SEC's choices of complaints to investigate is often amazing. It's regularly settling cases without an admission of wrongdoing is appalling.