Monday, March 1, 2010
The Continuing SEC Circus
"In the headquarters of the [SEC], Mr. Madoff's name is rarely spoken. More than seven months after he was sentenced to prison for orchestrating a global Ponzi scheme, shaken SEC employees are still struggling to come to grips with how they failed to catch him before it was too late. ... It is the job of Robert S. Khuzami, the SEC head of enforcement, to unmask the next Madoff--and, equally daunting, to convince skeptics that the commission can reassert itself and adequately police Wall Street. ... Unlike some at the commission, Mr. Khuzami, 53, talks openly about the Madoff fiasco. 'For a group of people committed to investor protection and prevention, the tragedy of investors' losses are not lost on anyone,' he said in an interview in his bright, corner office in Washington. ... Wall Street vastly outdoes the SEC in terms of people, money and, many in the financial industry argue, talent. The administration has requested a budget of $1.3 billion for the SEC for 2011. ... On Monday, what SEC officials had hoped might be a quick victory in a prominent case instead turned into another potential headache. Mr. Khuzami and a squadron of SEC lawyers filed into a New York courtroom where the commission was trying to end its losing investigation into the takeover of Merrill Lynch by Bank of America [BofA]. But District Judge Jed S. Rakoff--who last September rejected as too low an earlier $33 million settlement that the SEC had reached with [BofA]--again raised questions about the commission's handling of the case. If he rules against the second settlement, for $150 million, the case is set to go to trial on March 1. ... The commission also has not sattisfied critics on Capitol Hill--and many ordinary Americans--who had hoped to see charges leveled at banking executives after the financial collapse. Mr. Khuzami recognizes that the cases the SEC brings, or does not bring, will define his tenure and, possibly, the future of the commission. 'It's all about the cases in the end,' he said. ... The SEC has hired some talent from Wall Street. Norm Champ, the former general counsel of Chilton Investment Company, a multibillion-dollar hedge fund, was named last year as an associate director in the examinations group in New York. Richard Bookstaber, a former Wall Street risk manager, joined the new division of risk, strategy and financial innovation", my emphasis, Jenny Anderson & Zachery Kouwe at the NYT, 9 February 2010, link:
Just what we need, more "former" Wall Streeters at the SEC. Khuzami is right about one thing: we will be interested in the cases the SEC doesn't bring. Who at the SEC cares about "investor protection" as opposed to protecting their former and future employers?