It was gratifying to see Linda Thomsen, the mulish, passive-aggressive and ineffectual head of enforcement for the SEC, get the boot. Watching the ass-whuppin' she got from the House Financial Services Committee (indeed, she hardly finished a sentence during any of the questioning) was great theater, but it was infuriating to hear how these corrupt, mealy-mouthed bureaucrats gutted the SEC.
Markopolos' claim that the SEC (and Thomsen) refused to take on powerful Wall Street players is not new. For example, the investigation of insider trading at the Pequot Capital Management hedge fund was impeded by Thomsen. According to Bloomberg,
Iowa’s Grassley and Pennsylvania’s Specter, both Republicans, examined claims from a fired SEC attorney that superiors impeded his Pequot inquiry because of the prominence of those he was trying to investigate.
It's a sad comedown for Thomsen, after being in charge of the Enron investigation, but one she clearly deserved for her timidity and her demonstrated lack of a sense of duty. Although Ms. Thomsen clearly must share some of the blame, which may well seriously tarnish the rest of her career, the fact is that the lastest Chair of the SEC appointed by G.W. Bush, Christopher Cox, was responsible for presiding over a dramatic decrease in the number of prosecutions of fraud undertaken by the agency over the past few years.
It's a Republican that will take Ms. Thomsen' place: Robert Khuzami, now a lawyer for Deutsche Bank (!) Yet another fox watching the hen house, Mr. Khuzami is a diehard supporter of torture and the Patriot Act!! Really. Yet that is who will be taking the lead for enforcement at the Obama SEC. (In his defense, Khuzami was a well-recognized federal prosecutor under Clinton.)
What is going on here? Just what is it that the Obama administration really believes?