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There is a new Sheriff in town at the Securities Exchange Commission

Roger Caldwell1 There is a new Sheriff in town at the Securities Exchange Commission

Roger Caldwell

There is a new Sheriff in town at the Securities Exchange Commission

By Roger Caldwell

The Security Exchange Commission is a federal regulatory agency that is designed to protect investors and eliminate insider trading, accounting fraud, and misleading information about securities. Stock market trading is a risky business and the SEC keeps things fair and transparent for large and small investors. Each year the SEC brings hundreds of civil enforcement actions against individuals and companies for violation of the securities laws.

President Obama nominated a tough former prosecutor Mary Jo White to head the Securities Exchange Commission. The choice drew praise from both Wall Street and reform advocates, and help clean up some of the insider trading in the markets. In 2009, Bernie Madoff was convicted of a 50 billion Ponzi scheme, and the SEC was obviously not doing its job.

The president is expecting a swift confirmation and it is expected Mrs. White will go after white collar crime aggressively. The stock market is experiencing record breaking profits and I doubt if the broken system can be fixed. White collar crime is considered doing business, and when someone or a business is caught dirty, behind closed doors the problem is straightened out with a fine.

Mary Jo White is part of the revolving door, where former SEC enforcement officials are “going to work for the very same firm they used to police,” says Bruce Kudson. In Mrs. White’s case, she is now going to police firms that she used to represent, and this could create some uncomfortable questions during her interview for confirmation.

White represented HCA Holding, a healthcare provider in an insider trading investigation, and I would have to question if she could hold their feet to the fire if they had broken a rule. She also represented JPMorgan Chase & Company in major matters related to the financial crisis, and instead of being indicted for fraud; they were given funding to help clean up their financial shenanigans. It is obvious that she is a Wall Street friend, and she will look the other way when a major player breaks a law.

“We need to keep going after irresponsible behavior in the financial industry so that taxpayers don’t pay the price. I am absolutely confident that Mary Jo has the experience and the resolve to tackle these complex issues and to protect the American people in a way that is smart and in a way that is fair,” Obama said at a White House event to announce Whites’ nomination.

White has also represented former Bank of America CEO Lewis over a civil lawsuit in connection with Bank of America’s acquisition of Merrill Lynch and the revolving door keeps turning, and it looks like everyone is friends. I am sure that Mary Jo White is competent and capable, but I wonder how tough she will be on her friends.

It is too early to pass judgment on the SEC, but it was obvious that at times they have looked the other way on large successful companies breaking the law. In the last weeks, Steven Cohen’s company SAC Capital Advisors is being investigated for insider trading, and eight former employees have been charged with insider trading. All have pleaded guilty except two, but Mr. Cohen was not been charged.

It will be interesting to see if Mr. Cohen is charged with insider trading, because he owns one of the most successful hedge fund in the world. There is a new sheriff in town and she must be consistent, when there is wrongdoing and breaking the law. Time will tell if Mary Jo White has the courage and integrity to make fundamental changes in the operation of the SEC.

 

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    Carma Lynn Henry Westside Gazette Newspaper 545 N.W. 7th Terrace, Fort Lauderdale, Florida 33311 Office: (954) 525-1489 Fax: (954) 525-1861

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