Many on Wall Street were talking today about what's morphed into a small appetizer of schadenfreude served up with our dinners on Main Street, tonight. From my favorite Bloomberg columnist, Jonathan Weil. You really should read the entire piece...
The Best SEC Speech Ever
By Jonathan Weil
Bloomberg Media
Apr 8, 2014 2:25 PM EDT
Before today, I had never heard of Jim Kidney. And I certainly hope this isn't the last time I do.
Kidney, a longtime trial attorney for the Securities and Exchange Commission, delivered a barnburner of a going-away speech at his retirement party last month, which has only just begun to make the rounds publicly. Thanks to the union that represents the agency's employees, everyone can now read the whole thing. After a career in the SEC's enforcement division that began in 1986, Kidney, 66, was gracious, polite and full of good humor. And for the most part he didn't name names. But sometimes it wasn't hard to figure out whom he was talking about.
For example, note his reference to "broken windows" in this passage:
Combined with the negative views of the civil service promoted by politicians and the beatings we take from the public, it is no surprise that we lose our best and brightest as they see no place to go in the agency and eventually decide they are just going to get their own ticket to a law firm or corporate job punched. They see an agency that polices the broken windows on the street level and rarely goes to the penthouse floors. On the rare occasions when enforcement does go to the penthouse, good manners are paramount. Tough enforcement –- risky enforcement –- is subject to extensive negotiation and weakening.
That one could end up sticking like a glop of tar to Mary Jo White, the SEC's current chief. Back in October, as Bloomberg News reported at the time, White gave a speech in which she said her enforcement program would emulate the "broken windows" strategy used by former New York Mayor Rudy Giuliani to signal that disorder would be not tolerated.
"Minor violations that are overlooked or ignored can feed bigger ones, and perhaps more importantly, can foster a culture where laws are increasingly treated as toothless guidelines," she said. "And so, I believe it is important to pursue even the smallest infractions."
There's something to be said for that, sure. But the SEC also has to go after big fish, not just guppies. And after about a year at the SEC's helm, White is turning out to be not much different than her recent predecessors in that regard. There have been a handful of cases against big names such as JPMorgan Chase & Co. and hedge-fund manager Philip Falcone, but few that caused more than a flesh wound -- and never a settlement where a defendant was required to admit liability for fraud. (Heaven forbid.)
There's a lot more that Kidney said that's worth repeating...
Here's the straight news story from Bloomberg...almost as brutal as Weil's takedown...
SEC Goldman Lawyer Says Agency Too Timid on Wall Street Misdeeds
By Robert Schmidt
Bloomberg Media
Apr 7, 2014 9:00 PM PT
A trial attorney from the Securities and Exchange Commission said his bosses were too “tentative and fearful” to bring many Wall Street leaders to heel after the 2008 credit crisis, echoing the regulator’s outside critics.
James Kidney, who joined the SEC in 1986 and retired this month, offered the critique in a speech at his goodbye party. His remarks hit home with many in the crowd of SEC lawyers and alumni thanks to a part of his resume not publicly known: He had campaigned internally to bring charges against more executives in the agency’s 2010 case against Goldman Sachs Group Inc. (GS)
The SEC has become “an agency that polices the broken windows on the street level and rarely goes to the penthouse floors,” Kidney said, according to a copy of his remarks obtained by Bloomberg News. “On the rare occasions when enforcement does go to the penthouse, good manners are paramount. Tough enforcement, risky enforcement, is subject to extensive negotiation and weakening.”
Kidney said his superiors were more focused on getting high-paying jobs after their government service than on bringing difficult cases. The agency’s penalties, Kidney said, have become “at most a tollbooth on the bankster turnpike…”
And, here's a link to the story over at Zero Hedge:
Retiring SEC Lawyer Crucifies His Employer: "It's A Cancer" Working On Behalf Of The "Bankster Turnpike."
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Ah, yes..."Every dog has their day, 'cept for everyone the ones that got away..."
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