SEC thinks if you beat the market, you're a criminal

SEC Enforcement Division To Focus On Hedge Funds That Outperform The Market

March 28, 2011

In response to the Madoff scandal, the Division of Enforcement for the U.S. Securities and Exchange Commission is focusing on hedge funds that outperform market indexes by 3% on a steady basis. This initiative has raised a number of questions.

Recently, during congressional testimony, Robert Khuzami, the Director of the Division of Enforcement for the U.S. Securities and Exchange Commission (SEC), faced tough questions regarding the SEC’s response to the Madoff scandal. In response, Khuzami revealed an investigative initiative concerning hedge funds. Enforcement is now focusing on hedge funds that outperform “market indexes by 3% and [are] doing it on a steady basis." Khuzami referred to such performance as “aberrational,” and stated that Enforcement is “canvassing all hedge funds” for such “aberrational performance.”

http://www.mwe.com/index.cfm/fuseac...t_id/e6c28337-842e-4477-b83c-a3284fb35021.cfm

 

Well it is dodgy if they are outperforming by exactly 3% every year .

 

Come to think of it, yeah, that would be hard to do.

 

They need to focus on asian men shorter than 5'6"... that should give them some element of criminality.

 

http://dailybail.com/home/busted-robert-khuzami-sec-enforcement-chief.html

"BUSTED: Robert Khuzami SEC Enforcement Chief"

Keep in mind as you read that Citigroup was hiding - lying about - $40 billion of sub-prime exposure, and the CFO at the time, Gary Crittenden was fined a paltry $100k for his role in this blatant rape of federal securities law.

Khuzami who once promised to be a tough cop on the beat, allegedly broke protocol, held a secret meeting with his good friend - counsel for Citi - then instructed SEC staff to go easy on Crittenden and Arthur Tildesley, the lying curbskank at the helm of Citi investor relations.

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The U.S. Securities and Exchange Commissionfs internal watchdog is reviewing an allegation that Robert Khuzami, the agencyfs top enforcement official, gave preferential treatment to Citigroup Inc. executives in the agencyfs $75 million settlement with the firm in July.

¡Inspector General H. David Kotz opened the probe after a request from U.S. Senator Charles Grassley, an Iowa Republican, who forwarded an unsigned letter making the allegation. Khuzami told his staff to soften claims against two executives after conferring with a lawyer representing the bank, according to the letter.
Citigroup agreed in July to pay $75 million to resolve SEC claims that the bank understated investments linked to subprime mortgages as the housing crisis unfolded. Gary Crittenden, who stepped down as chief financial officer in 2009, and Arthur Tildesley, the New York-based bankfs former head of investor relations, agreed to pay $100,000 and $80,000, respectively, to resolve related claims.

The agencyfs settlement was questioned in August by U.S. District Judge Ellen Huvelle, who eventually approved it. She asked SEC lawyers why the agency hadnft pursued executives more aggressively.

¡gThere has been nothing here that is being done to assure anyone that senior management whofs responsible, whatever level of culpability youfre talking about, is going to have any pain here,h Huvelle said.
¡According to the letter, the SECfs staff was prepared to file fraud claims against both individuals. Khuzami ordered his staff to drop the claims after holding a gsecret conversation, without telling the staff, with a prominent defense lawyer who is a good friendh of his and gwho was counsel for the company, not the individuals affected,h according to a copy of the letter reviewed by Bloomberg News.
Prince and Rubin

¡The agency also said in a filing that former Chief Executive Officer Charles O. gChuckh Prince and former chairman Robert Rubin were among executives who knew 2007 losses were mounting on mortgage assets that Citigroup was faulted for not disclosing.

Citigroup executives repeatedly stated in 2007 that the bank had reduced exposure to subprime mortgage securities by 45 percent to $13 billion, as investors and analysts clamored for information about the deteriorating market, SEC attorneys said in court filings.

On an Oct. 15, 2007, conference call with analysts and investors, Crittenden said Citigroupfs gsubprime exposureh was $13 billion at the end of second quarter and had declined during the third quarter.

The figure he cited omitted gsuper-seniorh tranches of collateralized debt obligations and financial guarantees known as liquidity puts that allowed customers to sell debt securities back to Citigroup if credit markets froze, the SEC said. Those products added more than $40 billion of subprime risk that the bank didnft disclose to investors, the SEC said.

 

In response to the Madoff scandal, the Division of Enforcement for the U.S. Securities and Exchange Commission is focusing on hedge funds that outperform market indexes by 3% on a steady basis.
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This is funny as hell. I suppose we won't have to worry about the SEC going after pension funds endowments , etc. Those fuckers are always losing OPM ... ah but yes... projected returns of 7 - 8 returns....boyyahh. not to worry about 3%.

Why 3% ? ................3% is the new 10%%?

 

Why? I told you guys a couple years ago, these clowns on the Street would ruin it for everybody. Now, there's no turning back.

But this is interesting. Markopolous was talking about Madoff's returns being "unattainable.". What was that? 10 %. But SAC did 30 year in year out with an asset base growing at an exponential level. And nobody said boo. Maybe because Met life, NY life, all the biggies wanted the returns.

But, really. What would you expect? It is a bureaucratic response to a real problem. Don't worry. They'll just grease the auditors. No biggie.

 

the thread title is misleading..it's not "if you" can beat the market..it's about "if hedge fund can beat the market",not small retail guy..i'm not concerned..fuck them all..SEC included

 

Some of these hedge fund 'business' have to make 25% ROC or the hedge fund manager gets fired.

As for ponzi scheme, most of the investors in these hedge funds want their money back in full in less than 3 years or in demand investments.

Investment banks, banks, Private equity firms who fund or sell these exotic investements don't care how these hedge funds make their money as long as they get their money.

Bernie Madoff: I'm sure the SEC and the government knew about my ponzi scheme and kept under the table.

It took the most vicious market crash October 2008--november to june 2009 to reveal the Bernie Madoff scam and the wall street shell game. Prior to Sept 15, 2008,,the subprime 'problem' was under controll and wasn't a problem

maybe the SEC should spend more tax payers money in enforcing market integrity.. the market is full fraudsters. market manipulation etc. the market is one big rigged con-game casino.

SEC fine paid by Goldman Sachs is just a 'cost of doing business'.

It's business as usual as long as the SEC is paid off.

Even the Whitehous and finance committee on the payroll of Goldman Sachs crime family

 

But if hedge funds outperform market indexes by 100%, then it`s fine!