SEC Attorneys Accused Of Insider Trading

Go back and look at my first posts on ET. "Conspirancy theorists" were some of the nicer names. Did you think I was guessing????? What do you think Patch went through? Threats, account hackings. I know of one guy trading against the dark side......he started getting those two am calls."we know where your kids go to school." Another thing I got reemed for was the terrorism angle. Does anyone now doubt that that will surface? That we are such a gut bucket of a fucking nation, that Cox and his paid off cronies were so deep in this, that they knew the selling of financials last September were coming from Dubai and London, and that couldn't do anything about it, because they were too deep in the morass themselves. Welcome to my World. It took you long enough.

All these things you will start to read about as the Feds make their case. Thank the Lord for those GS 19's who serve because they love their country. They are all we have left, unless you really think The CIA really did lie to Pelosi.

 

And the hits just keep on coming:

The SEC's Harmon

Watchdog Digs Into Conduct At SEC

Reports Focus on Use of Influence And Stock Trades
　



By Zachary A. GoldfarbWashington Post Staff Writer
Sunday, May 17, 2009

A Securities and Exchange Commission official attempted "to intimidate and influence" a family member's broker on multiple occasions by invoking her position, potentially violating agency rules, according to the agency's inspector general.

The allegation, detailed in a report reviewed by The Washington Post, is one of several that have raised questions about the internal conduct of some SEC employees at a time when the regulator is trying to counter accusations that it failed to effectively police Wall Street.

Another investigation found that some of the agency's enforcement lawyers may have traded the stocks of Citigroup, United Health Group and other firms around the time the agency opened investigations into the companies.

The inquiries come as the SEC is trying to lift its image out of a morass created by its failure to stop Bernard L. Madoff's massive fraud or prevent the collapse of major Wall Street banks the agency regulated.

In the case of the SEC official who acted on her mother's behalf, investigators said the official, deputy secretary Florence Harmon, allegedly yelled at a Morgan Stanley broker over a disagreement and told him of her position at the agency. She later told a bank executive that he "should have Googled her name before he spoke with her," according to the report.

The broker told investigators she was trying to "bully him" and informed higher-ups at his firm. The inspector general, who didn't name Harmon but listed her position, referred the administrator for disciplinary action, up to and including dismissal. Her name was confirmed by an official. She continues to hold her post.

An SEC spokesman declined to comment on the case and said Harmon was unavailable. Attempts to reach her at home and at the office were not successful.

For months, a top federal lawmaker and the SEC's internal watchdog have been questioning whether the agency can adequately address possible violations of rules by employees. The SEC acknowledges that it is working to reform its internal practices.

Sen. Charles E. Grassley (R-Iowa), who released a heavily redacted version of the stock trading investigation last week, said the SEC must do better.

"Without a reliable compliance system, the SEC can't know whether this is an isolated incident or a widespread problem," he said in a statement. "The SEC needs a better system to deter misconduct and give the public confidence that this sort of thing isn't a systemic problem."

The SEC's inspector general, H. David Kotz, has tangled with the agency frequently since his appointment in 2007. He summarized the investigations in reports The Post requested through the Freedom of Information Act. In the report on the suspicious stock trades, he recommended the agency adopt new protections to guard against abuses.

"[T]he Commission has essentially no compliance system in place to ensure that Commission employees, with the tremendous amount of non-public information they have at their disposal, do not engage in insider trading themselves," he wrote in the report.

SEC spokesman John Nester said the agency is working to improve its compliance systems. "We have been taking additional steps to enhance our protections against the potential for improper conduct," he said, including acquiring a new computer system to report trading by SEC employees, hiring a chief compliance officer and clarifying rules. A new SEC chairman, Mary Schapiro, started in late January.

Nester added that the report on the stock trades "neither accuses any SEC employee of insider trading nor concludes that any such conduct took place." It alleges there may have been suspicious trading, but it does not level any formal accusation.

The SEC inspector general's office has opened other cases as well. It is investigating allegations that a top SEC official committed perjury in a letter to a senator and in court when discussing efforts to curb short-selling. Kotz is also looking into allegations that a top agency lawyer took part in an investigation in which he had a conflict of interest, according to a recent report summarizing ongoing probes.

The office began investigating potential abuses by the SEC's deputy secretary two years ago. The report alleged that Harmon repeatedly called a Morgan Stanley branch office about her mother's account, revealing herself to be a top SEC official "in an attempt to intimidate her mother's broker and other Morgan Stanley staff," the report said.

The SEC secretary's office oversees the legal review of all documents submitted to and approved by the commission, and also provides advice on practices and procedures.

The report said much of the account of the incidents came from Harmon's own admission. The SEC has a policy against officials using their positions for private gain. It's not known whether the SEC has begun to take any formal action.

Harmon told the SEC that she had phoned the Morgan Stanley broker because she had questions about decisions he was making regarding her mother's account. She told investigators she identified herself as an SEC official because the broker "was making statements to me that I thought were very incriminating," according to the report.

"When they start to say things that I think they could be reported for, I think I would appreciate it, if I were them, if I know where the person worked," Harmon told investigators in explaining why she repeatedly referred to her job.

The deputy secretary's boss told investigators she had told Harmon that "you need to keep your personal business separate from work."

In one inquiry into stock trading in recent years, SEC investigators found that two months before an investigation into a large health-care company was opened by her group, one employee sold all of her shares in the company. The employee also sold all shares in an oil company's stock days before her colleague, sitting in a neighboring office, opened an investigation into the company. Later, she bought additional shares of the company's stock.

In another case, an SEC employee told colleagues at a lunch that she could not buy stock in Citigroup because of active investigations into the bank. That didn't stop the colleagues from trading in the stock. They told investigators they were not told about the probes.

But they did not properly report trades to the SEC as required, the report said.

One of the employees described trading in stock as a passion. The employees, who were not named, denied to investigators that they engaged in improper conduct. They remain in their jobs.

 

SEC under fire again appropriately enough:

“The SEC inspector general’s office has opened other cases as well. It is investigating allegations that a top SEC official committed perjury in a letter to a senator and in court when discussing efforts to curb short-selling. Kotz is also looking into allegations that a top agency lawyer took part in an investigation in which he had a conflict of interest, according to a recent report summarizing ongoing probes.”

http://www.washingtonpost.com/wp-dyn/content/article/2009/05/16/AR2009051602359_2.html?hpid=topnews


And the evidence against that top SEC Official (James Brigagliano co-Director of the Division of trading and Markets) who committed perjury in a letter to a senator can be found here. Judge for yourself what transpired (hint: Follow the timeline on the documents and corporate actions)

http://investigatethesec.com/drupal-5.5/?q=node/123

 

Yep. And who uncovered this behavior, and brought it to the forefront?

Government task force? Nope. Well meaning politicians, concerned about their constituents, and the nation's economy? Nope?

Ordinary, everyday Joes who saw it, felt it, and stood up against it enduring tremendous risk and backlash at their own peril.

Someday, we'll tell you about a CEO of a small company, speaking up against naked short selling, who took a 6 and half million dollar fine from the same SEC who let GS off with 2 million after years of naked shorting.

The SEC will be dismantled. Has to be.

 

That's where the good information is. I wonder how many of them buy before approval letters.

Like last month. Wouldn't it have been nice to know about DNDN?

How come you traders bitch so much about the SEC? Did they pop you for something?

 

How do you think we got here????!!!!!

If the NASD/Finra and the SEC did their jobs, Capitalism wouldn't be taking the hit for corruption. O'Bama wouldn't be President telling us all how we're going to live.

Think about it. If the agencies weren't bought off, no Madoff. No naked shorting. No hedgefunds wrapping CDO's at 30:1. They are the ones who were supposed to protect capitalism, and they let the Wharton Mafia steal it from you . When you hear the left lamenting the rich, and Capitalism, they are really against the corruption. But, as Rahm Emmanuel said, as well as several other top Dems, "never waste a good crisis."

That's why. That, and the fact that a crooked cop in prison has the life expectancy of a fruit fly. They are despicable!

 

I am a Republican, but Bush never had a job his father didn't pay for or arrange for him. How can you praise Bush and trash the SEC when you didn't bother mentioning that Bush should have done hard time for dumping his Harken Oil common before the shit hit the fan. I think Linda Thomsen was the one who was lead SEC lawyer on that case. She let the turd off the hook because the Bush family leaned on a few SEC Commissioners.

The last good SEC Chairman was David Ruder. I think this new one, Schapiro, will be even better. The last good head of enforcement the SEC had was Stanley Sporkin. This new guy, Khuzami, already blew Sporkin away as far as new cases brought in his 1st 3 months. Geez, have you seen them? They are averaging 3.6 a day now.

The last good president we had was Ronald Reagan.

The FDA is where the good leaks are. How many FDA lawyers trade on those leaks (good or bad). At least at the SEC they won't let them sell short or trade options. No restrictions like that at the FDA, flytiger.

If you quit trading those penny stocks you might actually make a little money. Hell, even GE was a good buy a few months ago. Patchie should have told you but he was too busy bitching about something. Spend less time bitching and more time conducting good due dilligence and you might make some money, flytiger.

 

Source: http://www.bloomberg.com/apps/news?pid=20601087&sid=ai_W.obsRhmg&refer=home

U.S. Considers Stripping SEC of Powers in Regulatory Overhaul



By Robert Schmidt and Jesse Westbrook
May 20 (Bloomberg) -- The Obama administration may call for stripping the Securities and Exchange Commission of some of its powers under a regulatory reorganization that could be unveiled as soon as next week, people familiar with the matter said.
The proposal, still being drafted, is likely to give the Federal Reserve more authority to supervise financial firms deemed too big to fail. The Fed may inherit some SEC functions, with others going to other agencies, the people said. On the table: giving oversight of mutual funds to a bank regulator or a new agency to police consumer-finance products, two people said.
The 75-year-old SEC, chartered to oversee Wall Street and safeguard investors, has seen its reputation tarnished as some lawmakers blamed it for missing the incipient financial crisis and failing to detect Bernard Madoff’s $65 billion Ponzi scheme. Any move to rein in the agency is likely to provoke a battle in Congress, which would need to approve the changes, and draw the ire of union pension funds and other advocates for shareholders.
“It would be a terrible mistake,” said Stanley Sporkin, a former federal judge and enforcement chief at the SEC. “Whatever the SEC has done or didn’t do, it is still the premier investor protection agency around.”
SEC Chairman Mary Schapiro’s agency has been mostly absent from negotiations within the administration on the regulatory overhaul, and she has expressed frustration about not being consulted, according to people who have spoken with her. She has pledged to fight any attempt to diminish the SEC, they said.
Geithner, Summers
Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers are leading the administration’s effort to redraw the lines of authority for policing the financial system.
“We’re going to have to bring about a lot of changes to the basic framework of oversight, so there’s better enforcement,” Geithner, said May 18 at the National Press Club in Washington. “That’s going to require simplifying, consolidating this enormously complicated, segmented structure.”
Geithner may be asked about his plans for a regulatory revamp at a Senate Banking Committee hearing on financial-rescue efforts in Washington today.
Treasury spokeswoman Stephanie Cutter didn’t respond to requests for comment. The SEC also didn’t immediately respond.
Dinner Meeting
Geithner was set to discuss the proposals at a dinner last night with Summers, former Fed Chairman Paul Volcker, ex-SEC Chairman Arthur Levitt and Elizabeth Warren, the Harvard University law professor who heads the congressional watchdog group for the $700 billion Troubled Asset Relief Program.
President Barack Obama has said he wants to sign legislation on regulatory changes by year-end. House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat, is planning hearings with the aim of drafting a bill by the end of June.
The SEC’s job is to regulate stock markets, police securities sales and make sure public companies make adequate disclosures to investors about their finances. The commission has five members, with the chairman and two commissioners typically from the president’s political party and the other two from the party not in the White House.
Schapiro was appointed by Obama to replace Christopher Cox, who was named by President George W. Bush.
Cox Record
Under Cox, the SEC ceded some of its authority to the Fed after the central bank responded to Bear Stearns Cos.’ near collapse last year by inserting its own examiners into Wall Street securities firms.
Former Treasury Secretary Henry Paulson, Geithner’s predecessor, urged Congress in a March 2008 “blueprint” for overhauling financial rules to give the Fed broader powers to oversee risk in the system.
Opponents of giving the Fed more authority, such as former SEC chief Levitt, have said the central bank’s focus on keeping the financial system solvent may trump efforts to punish companies for violating securities laws. Levitt is a board member of Bloomberg LP, the parent company of Bloomberg News.
The SEC’s reputation took a hit last week when U.S. Senator Charles Grassley, an Iowa Republican, released a report saying two of its enforcement attorneys face an insider-trading investigation by the Federal Bureau of Investigation.
Trades Questioned
The report, written by the SEC inspector general’s office, faulted the SEC for inadequately monitoring trades by the employees and said one of them sold shares in companies after co-workers opened probes into the firms. Both employees, who are enforcement attorneys in the SEC division that investigates securities fraud, denied any wrongdoing.
While the agency has been battered recently, it still has powerful supporters, including a number of Democrats on the Senate Banking Committee who aren’t likely to support having an agency they oversee cut back.
In addition, public pension funds that hold $872 billion of assets urged lawmakers this month to protect the SEC’s turf in any legislation overhauling financial regulation.
The California Public Employees’ Retirement System, the New York retirement fund and 12 other pension funds wrote letters to Frank and Senate Banking Committee Chairman Christopher Dodd, arguing that the SEC “must maintain robust regulatory and enforcement authority” over securities trading, brokers, money managers, corporate disclosures and accounting rules.
To contact the reporters on this story: Robert Schmidt in Washington at rschmidt5@bloomberg.net; Jesse Westbrook in Washington at jwestbrook1@bloomberg.net.
Last Updated: May 20, 2009 00:01 EDT

 

And by the way, it's time to put on your thinking caps. If Obama is moving against the all powerful SEC propped up by all powerful Wall St. and their Stamford asshole buddies, then, how bad to you really think it is?

Because I've been fighting for this day for years, and I'm still shocked.

 

are truly evil so how come guys like Brent Baker are saying they are not, flytiger? Can't have it both ways, can you? Do you really believe someone with an advanced degree in mathematics can't add and subtract?

If those penny stocks you and Patchie love so much would quit burning thru cash and doing dilutive PIPE deals then maybe they wouldn't be trading sub-penny. Ever think of that? No one in their right mind is willing to invest in cash burn pigs.

You two spend way too much time bitching and not enough time conducting due diligence.

GE was a very nice trade and if Patchie told you to load up a few months ago, good for him.