Comings and Goings and Dealings at the SEC

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Last Wednesday, Linda Thomsen was one of a handful of contemptuous SEC officials who appeared before Congress–and pretty much refused to answer any questions. That same day, new SEC head Mary Schapiro sent a very contrite letter to Paul Kajorski, admitting, "Today’s hearing before your Subcommittee cannot have been satisfactory for you." Schapiro offered to meet at Kanjorski’s earliest convenience so, "we can determine a course forward." On Friday, Schapiro got rid of rules that GOP hack Chris Cox and his predecessor had put into place that made it hard to impose financial penalties on companies.

Securities and Exchange Commission chairman Mary Schapiro announced Friday she would make it easier for SEC staff to launch formal investigations of corporations, and she overturned her predecessor’s policy of requiring commission approval for levying financial penalties against public companies.

The latter move, in particular, represents a rebuke to her predecessor, Christopher Cox, and to former SEC commissioner Paul Atkins.

[snip]

Schapiro said the enforcement staff had told her the pilot program had "introduced significant delays into the process of bringing a corporate penalty case; discouraged staff from arguing for a penalty in a case that might deserve a penalty; and sometimes resulted in reductions in the size of penalties imposed." 

Schapiro also said it was too difficult for enforcement staff to launch a formal investigation, which currently also requires permission from the SEC.

In undoubtedly related news, Linda Thomsen will announce her resignation today.

The U.S. Securities and Exchange Commission’s top enforcement official, Linda Thomsen, is expected to resign on Monday, CNBC television said.

[snip]

The enforcement division has been heavily criticized for how it handled the Bernard Madoff case, in which the former financier is accused of defrauding investors of $50 billion.

And in other, probably related news, the SEC has decided that Madoff will be held civilly, as well as criminally, liable for his deeds.

The Securities and Exchange Commission says it has agreed with Bernard Madoff on a deal that could eventually force the disgraced money manager to pay a civil fine and return money raised from investors.

The agency said Monday the agreement states that Madoff cannot contest allegations of civil fraud and that possible penalties will be decided "at a later time."

I look forward to seeing whether this civil fraud deal reflects the earlier contemptuous approach of Linda Thomsen, or whether it reflects the new responsive era of Mary Schapiro.

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24 replies
  1. acquarius74 says:

    This video clip is a keeper! Rep Gary Ackerman prooves to me that there is at least one conressman living in the real world with the guts to do his job. We need more of that; just look at the real action that has happened with such speed as a result.

    Thanks, EW.

  2. Rayne says:

    Yeah, I saw the announcement about Thomsen on CNBC and whooped it up. Definitely a new sheriff in town, although it remains to be seen how this will all pan out when Markopolous said there were so many other criminal scams going on.

  4. bobschacht says:

    Good news! Now we need a whole lot more resignations like this across many Federal departments. Including the DOJ.

    Maybe we need a lot more hearings that put Bush appointees on the hot seat.

    Bob in HI

    • sunshine says:

      It must be done. He must be investigated. Or we could be looking at another Bush, jebby that is, continuing on what shrub and shooter started. Geo 41 has already announced he wants to see his other boy in the WH.

  7. FormerFed says:

    I watched most of that hearing and actually thought Thomsen was the least obnoxious of the 4 stooges from the SEC that were witnesses. The Gen Counsel fellow was obsequious and the bald headed guy seemed about as dense as a piece of wood. The other witness that was from another agency was the only one that actually answered a question.

    Ackerman was great and Kanjorski was pretty good also (and Harry Markopolos was fantastic).

    BTW, I thought I read something about Markopolos saying some nasty things about the agency (can’t remember the name) that Schapiro headed in her former job. Something about the agency being full of corruption.

  8. Sara says:

    There have been two additional Ponsey Schemes indicted in Minnesota since the election, neither of which has made the national press. One just last week from Roseville Minnesota, and another back in November from I believe Waverly Minnesota. One about four billion, the most recent, about one billion.

    Strikes me that this may be something like the US Attorney Gate story — the single diget billions scams scattered about the country, and not attracting all that much attention because they are not where the financial press does a good deal of reporting, but taken together they could be as large or much larger than Madoff. In both of the local cases the pattern seems superficially similar, the SEC did receive complaints and requests for investigative work, and they were totally ignored. It might be productive to compile these “local” cases and see if they add up.

    And by way of a recommendation — damning book. I am just about finished reading Russ Baker’s “Family of Secrets: The Bush Dynasty, the Powerful Forces that put it in the White House, and what their influence means for America” Bloomsbury Press. Just came out about the time of Regime Change, and thus is very up to date as of last fall. Same theme as Kevin Phillips a few years ago, but much more detailed. It is not pleasant to read, but it is a very tough indictment. Baker is a very experienced investigative reporter — WPost, Vanity Fair, Nation, NYTimes, LATimes, New Yorker, and editor at Columbia Journalism Review. Baker sees GHWBush and GWBush as two peas in a pod, both specialists in doing covert actions that seemingly are in the open…but aren’t. The narrative actually begins with Preston Bush and WWII, and moves through everything Bush right up to the recent departure from the WH. In the process, he re-writes much of Watergate, holding GHWBush largely responsible for the destruction of Nixon — and it makes a hell of a lot of sense to me, and he makes a good effort to situate GHWBush in the Kennedy Assassination Story. His advantage over Phillips is the ability to establish how covert operators actually think in carrying out operations, and with this framework he thus takes what is very well known information, and re-works the narrative telling quite a different story. Anyhow, Baker’s book needs reading and extensive discussion.

  9. Sara says:

    The earlier case is against Tom Petters, of Petters Group Worldwide. He was arrested in late September, and has been in the Ramsey County Jail ever since, as the US Attorney had evidence he planned to flee the country. The scam was for between 3 and 4 billion. A number of businesses are involved, some have declared bankruptcy so as to continue to operate while they search for new owners. There are a good many known Republicans who were taken to the clip joint by Petters, and some are speculating that the inner circle of several mid-west Republican Circles were the “affinity group” in this case — much as country club Jews seem to have been the affinity group in the Matoff case. Petters was a big donor in the past — even donated to DFL’er Amy Klobuchar who didn’t let the sun go down before she sent back the money to the Bankruptcy Court.

    The other one — know much less about it because it is much more recent — is Dennis Kozlowski of Rosedale. This is supposed to be just over a billion, and is also indicted as a ponzi scheme. He too is in a local jail and gets no pre-trial bail. Also something of a Republican player.

    Just Google these names and you will find tons of news reports with links to court filings, police reports and all the rest. My question is whether or not these things are showing up all over the country, and just not getting noted by the national financial press. I spent some time looking up local people on the Madoff list, trying to assess the damage, and it is pretty steep. Over 400 Minnesota Madoff clients wiped out, some of them donors to progressive causes. I raised money from one foundation back in the days when I was setting up AIDS services — good people, and as I see it Wellstone Action took a hit, as their voter registration education program came from one of the foundations that was wiped out, and it seems that the local citizen’s Journalist group may also have been hit, as their major donor was a family (dozens of members and funds) that was totalled. Apparently Mayo Clinic also was hit for a couple of million — a donor that set up a research center to be funded from a family foundation over a number of years was cleaned out. As I read some of the articles, it seems that the Bankruptcy Laws are written in such a way that Tax Exempt groups may suffer more than ordinary Madoff clients, as they are exposed in Claw Back litigation — so the non-profits may have to give back grants made over the past half decade. Sweet!!!

    EW — carefully read the chapters in Baker’s book on Harken, because I think they clearly describe the framework for this kind of non-businesslike scam in a way I have not seen before in any effort to actually describe what Harken was really all about. It really is a very sophisticated version of what the Mob does when it takes over a business.

  10. SouthernDragon says:

    Now the other 4 division directors and the sorry ass General Counsel need to follow Thomsen’s example. If there was ever a sham that panel was it. Speaking of GC Vollmer, I sure wouldn’t have wanted to be at his house when he got home that night.

  11. bigbrother says:

    Transpareny
    Investigation
    Accountability
    only for thr have nots
    Insiders walk…American justice…Solomon said…
    “Nothing new under the son.”

  12. bigbrother says:

    If the Dems start playing hardball the Reoukes would stop obstructing legislation. There were a lot of smaller players that duplicated the big Ponzi artist…we have one sitting in the County jail today…ripped for $4 million locals.

  13. nahant says:

    Lock them all up! They are the ones who sold everyone a bill of goods with all these CDS, CDO and other exotic investments. Send everyone of them to the Big house for driving our financial house and economy intoa recession/depression. Also they should be driven into poverty by taking all their assets and money as restitution so they and their families can experience just what that means to be poor.

  14. NorskeFlamethrower says:

    AND THE KILLIN’ GOEZ ON AND ON AND:

    Citizen Raven:

    If yer out there…everythin’s hangin’ two in a bunch…I’m in and outta here for a few hours I’ll catch ya later. I’ve made my peace with growin’ old, though, and the doctors want me ta do what I shoulda done 20 years ago so they ken continue ta get their payments from my insurance carrier…ya talk about gettin’ it comin’ and goin’, this shit is jest like bein’ “in-country”, ya never know where the next one’s comin’ from but at least ya have the comfort of knowin’ someone is makin’ money on ya somewhere…

    KEEP THE FAITH AND DON’T EAT THE FRUIT COCKTAIL!!

  15. bigbrother says:

    Ackerman mentioned at the end of the video Markopolus is revealing yet another Ponzi fraud tommorow do you know about it? Can we invite Markopolus to blog here?

  16. Sara says:

    EW – Madoff and Petters share something, the same Audit Firm. Apparently it is being sued right and left by everyone who lost their fortune in both schemes. Firm is McGladrey and Pullen of Bloomington Minnesota. The firm was also mentioned by Markopolus in testimony last week.

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