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Is the SEC on Thin Issa?
Author: Raine    Date: 08/18/2011 13:10:08

Yesterday, the news broke that the Securities and Exchange Commission allegedly has been destroying thousands of files related to cases involving "activity at large banks and hedge funds during the height of the financial crisis in 2008". This is being reported at Market Watch, and Matt Taibbi has a piece in Rolling Stone about this as well. It appears that he broke the story.

From Market Watch:
Agency staff “destroyed over 9,000 files” related to preliminary agency investigations, according to a letter sent in July to Grassley, the top Republican on the Senate Judiciary Committee, and obtained by MarketWatch.

The allegations were made by SEC enforcement attorney, Darcy Flynn, in a letter to Grassley. Flynn is a current employee, and according to the letter, received a bonus for his past year’s work.

Flynn alleges the SEC destroyed files related to matters being examined in important cases such as Bernard Madoff and a $50 billion Ponzi scheme he operated as well as an investigation involving Goldman Sachs Group Inc. trading in American International Group credit-default swaps in 2009.
There is far more about this in both articles I have linked. This promises to become a huge scandal. That said, something caught my eye this morning as I was surfing around the 'net looking for a story to write about today. Chuck Grassley states:
“It doesn’t make sense that an agency responsible for investigations would want to get rid of potential evidence. If these charges are true, the agency needs to explain why it destroyed documents, how many documents it destroyed over what timeframe, and to what extent its actions were consistent with the law.”
Republican or not, he is correct to ask that question. Many people have asked why no one has been prosecuted or investigated, but I wonder if Mr. Grassley was aware that his esteemed colleague in the House may have known something about this for a long long time. Early in the morning, Think Progress broke some damning news about Darrell Issa:
Goldman Sachs VP Changed His Name, Now Advances Goldman Lobbying Interests As A Top Staffer To Darrell Issa
Issa’s demand to regulators is exactly what banks have been wishing for. Indeed, Goldman Sachs has spent millions this year trying to slow down the implementation of the new rules. In the letter, Issa explicitly mentions that the new derivative regulations might hurt brokers “such as Goldman Sachs.”

Haller, as he is now known, went by the name Peter Simonyi until three years ago. Simonyi adopted his mother’s maiden name Haller in 2008 just as he was leaving Goldman Sachs as a vice president of the bank’s commodity compliance group. In a few short years, Haller went from being in charge of dealing with regulators for Goldman Sachs to working for Congress in a position where he made official demands from regulators overseeing his old firm.
Check out the timeline for this fellow:
– After completing his law degree in 2000, Haller was employed by Federal Energy Regulatory Commission as an economist, and later with the Securities and Exchange Commission in the Office of Enforcement.

– In April of 2005, Haller resigned from the SEC to take a job with Goldman Sachs. He soon began lobbying the SEC on behalf of Goldman Sachs.

On September 2, 2009, Haller left Goldman Sachs to take a job with the law/lobbying firm Brickfield Burchette Ritts & Stone.

In January of 2011, Haller was hired to work for Issa on the Oversight Committee. Under the supervision of Haller, Issa sent a letter dated July 22, 2011 to bank regulators (including the heads of the Federal Reserve, FDIC, FCA, CFTC, FHFA, and Office of Comptroller) demanding documents to justify new Dodd-Frank mandated rules on margin requirements for banks dealing in the multi-trillion dollar OTC derivatives market, like Goldman Sachs.
One has to wonder at this point: how much does Darrel Issa know, and when did he himself know it. As the head of the House Oversight Committee he CERTAINLY should be able to help Senator Grassley out.

Forbes reports:
If the allegations are found to be true this would be a detrimental blow to the SEC’s already shoddy reputation. The agency has been publicly flogged for missing the Madoff fraud. Since then it’s been trying to redeem itself by restructuring its operations and by adding new lieutenants like chief enforcement officer Robert Khuzami. Further the SEC has been heavily criticized for its revolving door in which its employees leave to work for Wall Street and vice versa thus created a conflicted environment.
It appears quite clear that revolving door includes Congress as well. I want someone to investigate Congressman Issa for starters.


and
Raine
 

88 comments (Latest Comment: 08/18/2011 22:30:02 by Raine)
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Comment by TriSec on 08/18/2011 13:37:40
Morning, folks!

Another day that somebody in IT seems to have forgotten to turn on Websense, so I'll take advantage of that while I can.

An update from TriSec land...lots of glum faces around the office; we had 31 layoffs yesterday. (Not my department, by the Grace of Allah.) But seeing that I've been here not quite a year and this is the 3rd round of layoffs already....the company is definitely moving in the wrong direction.

So, I'm back on the market again. Fortunately, some of the payors in the area are in decent shape, and an old friend already has a lead on two positions for me, including one that has been open almost a year (and he had that same lead last year at this time.) It would mean going back to the dark side, though.

Remember, I used to work for the payors, and I was that bastard that denied claims for no reason. The hell of it is, it was interesting work, I was good at it, and it paid well. Beats living in the car, right?

Anyway....

Comment by Raine on 08/18/2011 13:45:28
Mala. As we leaving the Fair a lady jumped out of the passenger side of the car she was in and started screaming at the security guy for not letting them leave the fair as fast as she wanted.

So I yelled at her *We all wanna leave get back in your damn car!* and then the security guy let us drive out first.

Comment by Raine on 08/18/2011 13:48:01
Quote by TriSec:
Morning, folks!

Another day that somebody in IT seems to have forgotten to turn on Websense, so I'll take advantage of that while I can.

An update from TriSec land...lots of glum faces around the office; we had 31 layoffs yesterday. (Not my department, by the Grace of Allah.) But seeing that I've been here not quite a year and this is the 3rd round of layoffs already....the company is definitely moving in the wrong direction.

So, I'm back on the market again. Fortunately, some of the payors in the area are in decent shape, and an old friend already has a lead on two positions for me, including one that has been open almost a year (and he had that same lead last year at this time.) It would mean going back to the dark side, though.

Remember, I used to work for the payors, and I was that bastard that denied claims for no reason. The hell of it is, it was interesting work, I was good at it, and it paid well. Beats living in the car, right?

Anyway....
Tri -- perhaps that business isn't as dark as it once was with the new regulation that are going into place in the health insurance industry.


Comment by wickedpam on 08/18/2011 13:54:25
Quote by Raine:
Mala. As we leaving the Fair a lady jumped out of the passenger side of the car she was in and started screaming at the security guy for not letting them leave the fair as fast as she wanted.

So I yelled at her *We all wanna leave get back in your damn car!* and then the security guy let us drive out first.



hahaha Gotta love a county fair

Comment by Mondobubba on 08/18/2011 13:55:26
So, Mala, all up Maryland people are crazy? At least we didn't rebel against Abraham Lincoln being elected president like another state I could mention.

Comment by Mondobubba on 08/18/2011 13:57:47
Quote by wickedpam:
Quote by Raine:
Mala. As we leaving the Fair a lady jumped out of the passenger side of the car she was in and started screaming at the security guy for not letting them leave the fair as fast as she wanted.

So I yelled at her *We all wanna leave get back in your damn car!* and then the security guy let us drive out first.



hahaha Gotta love a county fair



Clearly not a Maryland native.

Comment by wickedpam on 08/18/2011 13:58:23
Quote by Mondobubba:
So, Mala, all up Maryland people are crazy? At least we didn't rebel against Abraham Lincoln being elected president like another state I could mention.



All I know is that every time I'm cut off, tailgated or road raged in traffic the license plate usually turns out to be from MD although recently DC is giving them a run for their money.

Wait I thought you were from VA? And I still think NoVA would snap off if they could

Comment by Scoopster on 08/18/2011 13:59:16
http://images.bluegartr.com/bucket/gallery/39fb537fc4534fb1c0ab71b6f1a162aa.jpg


Comment by Raine on 08/18/2011 14:07:14
Scoop! that was great!

and it proves one thing: our house is a left leaning home. It's no wonder Kizzy barks when she hears

And like the Republicans -- it's her one trick.

Comment by Mondobubba on 08/18/2011 14:09:51
Quote by wickedpam:
Quote by Mondobubba:
So, Mala, all up Maryland people are crazy? At least we didn't rebel against Abraham Lincoln being elected president like another state I could mention.



All I know is that every time I'm cut off, tailgated or road raged in traffic the license plate usually turns out to be from MD although recently DC is giving them a run for their money.

Wait I thought you were from VA? And I still think NoVA would snap off if they could


No, I was born in DC, raised in glorious MoCo. When I met Mrs Mondo, we lived in NoVa.


Comment by Mondobubba on 08/18/2011 14:11:36
Comment by wickedpam on 08/18/2011 14:16:01
Quote by Mondobubba:
Quote by wickedpam:
Quote by Mondobubba:
So, Mala, all up Maryland people are crazy? At least we didn't rebel against Abraham Lincoln being elected president like another state I could mention.



All I know is that every time I'm cut off, tailgated or road raged in traffic the license plate usually turns out to be from MD although recently DC is giving them a run for their money.

Wait I thought you were from VA? And I still think NoVA would snap off if they could


No, I was born in DC, raised in glorious MoCo. When I met Mrs Mondo, we lived in NoVa.



Hey one set of my grandparents lived in Rockville - expections can be made

Comment by Raine on 08/18/2011 14:18:33
ooh -- Bendy giving a little advice to representative Tonko. Very well played, Mr. Bender.

Comment by Raine on 08/18/2011 15:04:00
I have to wonder if the market issues of the day have to do with The story in the blog today couple with this: Government Probe of S&P



Comment by wickedpam on 08/18/2011 15:07:43
You'd think that S&P would have lost any credibility with all this swirling around it

Comment by Raine on 08/18/2011 15:12:18
Quote by wickedpam:
You'd think that S&P would have lost any credibility with all this swirling around it

I think it has.

What I find incredibly interesting is that the DoJ began it's investigation BEFORE the downgrade.

There is something going on here.



Comment by Raine on 08/18/2011 15:18:06
I'm still trying to understand why this guy is a Repub.

Makes no sense.

Comment by TriSec on 08/18/2011 15:22:01
Non-Sequitir:

It's interesting being a liberal and wearing a Scout uniform. It's essentially a conservative organization, and I've been running into more and more differently-winged folks throughout council.

Hasn't seemed to have affected their dedication to the boys or the program as of yet. There is an unwritten rule not to discuss politics whilst in uniform that both sides are keeping. (Not so much on Facebook, though. )

Comment by wickedpam on 08/18/2011 15:22:51
Quote by Raine:
Quote by wickedpam:
You'd think that S&P would have lost any credibility with all this swirling around it

I think it has.

What I find incredibly interesting is that the DoJ began it's investigation BEFORE the downgrade.

There is something going on here.




you think its tit for tat? DoJ investigates them, they downgrade us?

Comment by Raine on 08/18/2011 15:33:10
As an addendum to todays blog: Grassley should have known there were serious issues with the SEC: From April 2010
Dozens of Securities and Exchange Commission staffers used government computers to access and download explicit images and many of the incidents have occurred since the global financial meltdown began, according to a new watchdog investigation.

The SEC inspector general conducted 33 probes of employees, 31 of which occurred in the last two and a half years, according to a summary of the cases requested by Sen. Charles E. Grassley (R-Iowa) that first surfaced Thursday evening.

Several of employees held senior positions, earning between $99,300 and $222,418 per year, the inspector general's summary said. Three of the incidents occurred this year, ten in 2009, 16 in 2008, two in 2007 and one each in 2006 and 2005.

In one instance, a regional office staff account admitted viewing pornography on his office computer and on his SEC-issued laptop while on official government travel. Another staff account received nearly 1,800 access denials for pornography Web sites in a two-week period and had more than 600 images saved on her laptop’s hard drive, the report said.

A senior attorney at SEC headquarters in Washington admitted he sometimes spent as much as eight hours viewing pornography from his office computer, according to the report. The attorney’s computer ran out of space for the downloaded images, so he started storing them on CDs and DVDs that he stored in his office.

Rep. Darrell Issa (R-Calif.), ranking Republican on the House Oversight and Government Reform Committee, said it was “nothing short of disturbing that high-ranking officials within the SEC were spending more time looking at pornography than taking action to help stave off the events that brought our nation's economy to the brink of collapse."




Comment by Raine on 08/18/2011 15:34:14
Quote by wickedpam:
Quote by Raine:
Quote by wickedpam:
You'd think that S&P would have lost any credibility with all this swirling around it

I think it has.

What I find incredibly interesting is that the DoJ began it's investigation BEFORE the downgrade.

There is something going on here.




you think its tit for tat? DoJ investigates them, they downgrade us?
No I don;t think they were aware they were being investigated.

Sadly -- no one ever knows what the DoJ is doing....


Comment by Raine on 08/18/2011 15:35:30
Let me stress this paragraph:
Rep. Darrell Issa (R-Calif.), ranking Republican on the House Oversight and Government Reform Committee, said it was “nothing short of disturbing that high-ranking officials within the SEC were spending more time looking at pornography than taking action to help stave off the events that brought our nation's economy to the brink of collapse."


Comment by wickedpam on 08/18/2011 15:37:26
Quote by Raine:
Quote by wickedpam:
Quote by Raine:
Quote by wickedpam:
You'd think that S&P would have lost any credibility with all this swirling around it

I think it has.

What I find incredibly interesting is that the DoJ began it's investigation BEFORE the downgrade.

There is something going on here.




you think its tit for tat? DoJ investigates them, they downgrade us?
No I don;t think they were aware they were being investigated.

Sadly -- no one ever knows what the DoJ is doing....



I can't believe they didn't know on any level, no gov't agency is that tight lipped

Comment by TriSec on 08/18/2011 15:39:11
Mmm, I just happened to go by the Dow Jones tracker at CNN Money.

< eyes pop out of head >

What the hell is going on around here today?

But then again, like I've been saying all along...."Good. I hope the GOP runs the country into the ground, because that's what it's going to take."

Doesn't make it any less scary, though.


Comment by Raine on 08/18/2011 15:49:34
Quote by wickedpam:
Quote by Raine:
Quote by wickedpam:
Quote by Raine:
Quote by wickedpam:
You'd think that S&P would have lost any credibility with all this swirling around it

I think it has.

What I find incredibly interesting is that the DoJ began it's investigation BEFORE the downgrade.

There is something going on here.




you think its tit for tat? DoJ investigates them, they downgrade us?
No I don;t think they were aware they were being investigated.

Sadly -- no one ever knows what the DoJ is doing....



I can't believe they didn't know on any level, no gov't agency is that tight lipped

They (the S&P) doubled down, I suspect.

There are evil forces at work right now.

Comment by wickedpam on 08/18/2011 15:56:55
AC/DC wine? hhhmmmm.....

Comment by velveeta jones on 08/18/2011 15:59:13
Hmmmmm, Lady Grey.

Comment by BobR on 08/18/2011 16:03:14
Quote by TriSec:
Mmm, I just happened to go by the Dow Jones tracker at CNN Money.

< eyes pop out of head >

What the hell is going on around here today?

But then again, like I've been saying all along...."Good. I hope the GOP runs the country into the ground, because that's what it's going to take."

Doesn't make it any less scary, though.

Dunno - I think the Republicans will blame it on President Obama, and a lot of people will believe them.


Comment by wickedpam on 08/18/2011 16:13:13
Did Thom read the blog?

Comment by Raine on 08/18/2011 16:26:16
Quote by wickedpam:
Did Thom read the blog?

Was he talking about the same thing?

I walked away for a moment.


Comment by Raine on 08/18/2011 16:27:13
Quote by velveeta jones:
Hmmmmm, Lady Grey.
That sounds lovely...


Comment by Raine on 08/18/2011 16:27:29
Quote by wickedpam:
AC/DC wine? hhhmmmm.....

I think I want some!

Comment by wickedpam on 08/18/2011 16:29:33
Quote by Raine:
Quote by wickedpam:
Did Thom read the blog?

Was he talking about the same thing?

I walked away for a moment.



Yep.

Comment by wickedpam on 08/18/2011 16:30:53
Quote by Raine:
Quote by wickedpam:
AC/DC wine? hhhmmmm.....

I think I want some!


bet its only going to be sold over the internet - we tried to sell the Grateful Dead wine that didnt' go over so well


Comment by livingonli on 08/18/2011 16:35:19
Good day folks. Best wishes to Mondo for his dad and TriSec. It seems like a lot of people (some of us more than others) on this blog keep getting stuck with bad luck.

And on the other side, I got DirecTV back up in the old household since I took advantage of the free Sunday Ticket offer. Although right now I am watching Doctor Who on BBC America (glad to have that channel back).

Comment by livingonli on 08/18/2011 16:36:40
Quote by wickedpam:
Quote by Raine:
Quote by wickedpam:
AC/DC wine? hhhmmmm.....

I think I want some!


bet its only going to be sold over the internet - we tried to sell the Grateful Dead wine that didnt' go over so well

I would figure that AC/DC fans are either beer or hard liquor drinkers.

Comment by wickedpam on 08/18/2011 16:38:12
Quote by livingonli:
Good day folks. Best wishes to Mondo for his dad and TriSec. It seems like a lot of people (some of us more than others) on this blog keep getting stuck with bad luck.

And on the other side, I got DirecTV back up in the old household since I took advantage of the free Sunday Ticket offer. Although right now I am watching Doctor Who on BBC America (glad to have that channel back).



which Doctor?

Comment by wickedpam on 08/18/2011 16:38:54
Quote by livingonli:
Quote by wickedpam:
Quote by Raine:
Quote by wickedpam:
AC/DC wine? hhhmmmm.....

I think I want some!


bet its only going to be sold over the internet - we tried to sell the Grateful Dead wine that didnt' go over so well

I would figure that AC/DC fans are either beer or hard liquor drinkers.



I would have though whiskey but I guess they've mellow with age

Comment by Raine on 08/18/2011 16:47:02
Quote by wickedpam:
Quote by Raine:
Quote by wickedpam:
Did Thom read the blog?

Was he talking about the same thing?

I walked away for a moment.



Yep.
well keep in mind -- We are friends with his associate producer... it is a possibility.


Comment by wickedpam on 08/18/2011 16:50:22
Quote by Raine:
Quote by wickedpam:
Quote by Raine:
Quote by wickedpam:
Did Thom read the blog?

Was he talking about the same thing?

I walked away for a moment.



Yep.
well keep in mind -- We are friends with his associate producer... it is a possibility.



yes, I had wondered if we have a special guest lurker

Comment by livingonli on 08/18/2011 16:53:34
Quote by wickedpam:
Quote by livingonli:
Good day folks. Best wishes to Mondo for his dad and TriSec. It seems like a lot of people (some of us more than others) on this blog keep getting stuck with bad luck.

And on the other side, I got DirecTV back up in the old household since I took advantage of the free Sunday Ticket offer. Although right now I am watching Doctor Who on BBC America (glad to have that channel back).



which Doctor?

Tennant. They are running "Daleks in Manhattan" right now.

Comment by wickedpam on 08/18/2011 16:58:16
Quote by livingonli:
Quote by wickedpam:
Quote by livingonli:
Good day folks. Best wishes to Mondo for his dad and TriSec. It seems like a lot of people (some of us more than others) on this blog keep getting stuck with bad luck.

And on the other side, I got DirecTV back up in the old household since I took advantage of the free Sunday Ticket offer. Although right now I am watching Doctor Who on BBC America (glad to have that channel back).



which Doctor?

Tennant. They are running "Daleks in Manhattan" right now.


ahh - I still like 9th better

Comment by livingonli on 08/18/2011 17:01:23
Quote by wickedpam:
Quote by livingonli:
Quote by wickedpam:
Quote by livingonli:
Good day folks. Best wishes to Mondo for his dad and TriSec. It seems like a lot of people (some of us more than others) on this blog keep getting stuck with bad luck.

And on the other side, I got DirecTV back up in the old household since I took advantage of the free Sunday Ticket offer. Although right now I am watching Doctor Who on BBC America (glad to have that channel back).



which Doctor?

Tennant. They are running "Daleks in Manhattan" right now.


ahh - I still like 9th better

Too bad he only did one season, but he did kick off the revival of the series. The only doctor who had a shorter tenure was Paul McGann who did the 1996 TV movie.

Comment by wickedpam on 08/18/2011 17:05:53
The reason the 9th left was because he didn't like how some of the senior people where treating the crew. He just recently did a MasterClass workshop in England and he finally talked about it. He loved being the Doctor, he loved working with Russell T Davies and he was sad about leaving but he was very proud the he was able to revive the series. I too wish he'd been able to do more seasons. But Tennet was great too, Eccelston just gets very over looked by fans

Comment by livingonli on 08/18/2011 17:12:36
Interesting indeed. It's amazing what sometimes goes on in the inside in the business. And Thom is still talking about Darrell Issa.

Comment by Mondobubba on 08/18/2011 17:22:11
:eyes glaze over with Dr Who discuss: :tries finding stick to poke self with to wake up:

Comment by TriSec on 08/18/2011 17:33:26
Bond rating minutae on yesterday's Fresh Aire....< becomes comatose >

But I did glean one interesting piece of information...did we know this?

Prior to the mid 1970s, investors used to pay for the rating information. Around that time, the regulations changed and the bond issuers started to pay for the ratings. As in, how much does a AAA rating cost?

The story went on to note all the companies that had favorable ratings the day before they tanked...including Enron, AIG, and Orange County (CA).





Comment by Scoopster on 08/18/2011 17:40:56
Quote by Mondobubba:
:eyes glaze over with Dr Who discuss: :tries finding stick to poke self with to wake up:

Oh good I'm not the only one here who's lost in Dr. Who chatter.

Yes, I'm a nerd and I'm not into Dr. Who. Sue me.

Comment by Mondobubba on 08/18/2011 17:43:01
Quote by TriSec:
Bond rating minutae on yesterday's Fresh Aire....< becomes comatose >

But I did glean one interesting piece of information...did we know this?

Prior to the mid 1970s, investors used to pay for the rating information. Around that time, the regulations changed and the bond issuers started to pay for the ratings. As in, how much does a AAA rating cost?

The story went on to note all the companies that had favorable ratings the day before they tanked...including Enron, AIG, and Orange County (CA).






Did they dive into the issue of the ratings themselves being inflated? I've seen a couple of articles that have touched on this, but I'm still unsure about the how the inflation in the ratings came about. Mah gut tells me that like most Bad Finanacial Ideas, it got its start when St Reagan of Santa Barbara was president.