Saturday, August 23, 2008

Loren Steffy on Auction-rate Securities

"This year it was Julius Caeser, and watching it, I felt a little like I did last week as I watched the investigation into the auction-rate bond market unfold. It's a familiar story. ... The auction-rate mess is a remake of two recent Wall Street productions: tainted research in 2002 and mutual fund market timing in 2003. ... In each case, the plot is the same: Wall Street used its control of information to lure unsuspecting investors into securities by misrepresenting their performance. ... For this latest drama, the curtain rises on a familar cast. There's a rogues' gallery of reported targets: Citigroup, Merrill Lynch, JPMorgan Chase, Morgan Stanley, UBS, Wachovia, Bank of America. On the other side, we have the prosecutors: Massachusetts Secretary of State William Galvin and the New York attorney general once again lead the charge, though Andrew Cuomo has replaced Eliot Spitzer, who briefly became governor before becoming a public disgrace. ... And the [SEC]? It's upstaged again, dithering over arcane short-selling rules and aiding in the administration's campaign to prop up the stocks of the very firms it should be investigating. The specter of Harvey Pitt looms large", my emphasis, Loren Steffy (LS) at the Houston Chronicle, 13 August 2008.

Harvey Pitt was my "favorite" SEC chairman. LS's article link: That's telling 'em LS.

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