News & Analysis
SEC Targets Brokers in Latest Crackdown
'Enforcement wave' heading for advisers ... The SEC's move to step up enforcement actions against investment advisers is only the tip of the iceberg, according to one former SEC official. Advertisement Related to this story "An enforcement wave is coming," said Jordan Thomas, a partner at Labaton Sucharow LLP and former assistant director at the Securities and Exchange Commission's asset management unit. "The world is about to change for investment advisers." Last week was a good example of the SEC's newfound aggressiveness. Three advisory firms were charged with having inadequate or nonexistent compliance programs and agreed to pay a total of $262,000 in fines and reimbursements. – Investment News
Dominant Social Theme: The SEC will make sure the laws are obeyed and people are protected.
Free-Market Analysis: The SEC is getting ready to crack down on US investment firms. This is surely a kind of sub-dominant social theme of the elite – that more enforcement from Washington, DC is going to help those in danger of being damaged by crooked brokers and advisors.
These efforts come on the heels of other aggressive actions by the SEC as regards different parts of its mandate. We covered this recently in an article entitled, "SEC to Beef Up Penalties in Defense of the Little Guy."
SEC Pushes to Toughen Penalties for Offenders ... The Securities and Exchange Commission, bruised by a judge's rejection of a proposed settlement with Citigroup Inc., sought the power to impose much- larger penalties on financial firms and individuals that commit fraud ... SEC Chairman Mary Schapiro, in a letter sent to senators late Monday, asked Congress to pursue legislation that changes the legal formulas used by the agency to calculate penalties. Ms. Schapiro's proposals would allow the SEC to impose fines up to nine times greater than the maximum currently allowed by U.S. law. – WSJ
In that article we pointed out, as we have before, that regulation doesn't work because it can't work. Every regulation is, in fact, a price fix that merely further distorts the economy. It is business cycle distortions that set off great episodes of greed and corruption. When everyone else is getting rich around you, it's difficult not to succumb to greed as well.
The reality is that the Western economic cycle is driven by central banking and this creates a tremendous societal distortion. Eventually, the boom fades and there is hell to pay. There are no jobs, white collar or otherwise. At this part of the cycle, after the damage has been done, the regulatory authority steps in to make its crackdown on "crooked" brokers and dealers.
Government protects its own. At the moment, the SEC is being urged on by the courts. Having been chastised over its lack of effectiveness in sniffing out the Madoff Ponzi scheme, the SEC bureaucracy is desperate to look as if it is being effective and "tough." It is upping the level of its "enforcement" and US investment advisors are apparently going to pay a price for the SEC's dysfunction.
In fact, Robert Khuzami, director of the SEC's enforcement division, stated as much. He told a Senate panel that the commission had decided to pursue investment advisers who "lie" on their registrations by attacking and then reaching the "out of court" deals that the SEC enjoys, which provide revenue. Here's some more from the Investment News article, above:
In a speech last week, Mr. Khuzami, a former federal prosecutor, compared the effort to former New York Mayor Rudy Giuliani's program in the 1990s that targeted people committing small infractions to prevent them from growing into dangerous criminals.
"For Rudy, it was a focus on subway turnstile jumpers and squee-gee men," Mr. Khuzami said. "For us, it's advisers who lie about graduating Phi Beta Kappa, conceal their association in a past failed business venture or inflate their assets under management, who might well be the same persons who outright steal your money when the markets turn against them."
The SEC's latest enforcement moves come shortly after the agency reported that it filed a record 146 actions against investment advisers in fiscal 2011, a 30% increase over the previous year. Those efforts were part of 735 enforcement actions overall, also a record, that produced $2.8 billion in penalties and repayments to investors.
... In addition, Congress is considering establishing a self-regulatory organization for investment advisers. The SEC has acknowledged that it examines only about 8% of the nearly 12,000 registered advisers annually. In the face of this pressure, the asset management unit is making its presence felt.
Wasn't the time for regulations to work earlier in the decade? They didn't of course because they never do. When the money is flowing and economies are inflating, people get greedy. Oversight diminishes because people believe it is getting in their way. Regulators bow to industry demands. When everyone is getting rich, it is difficult to accuse people of not being law-abiding, as they are making a profit for themselves and others. It is a "new era" after all.
During central bank, money-from-nothing euphorias, there is always a "new era" and an explanation for why it exists. And there will always be politicians (Bill Clinton comes to mind) ready to proclaim the business cycle in finally dead. Advances in industry or technology have finally killed it. Full employment is about to be realized. And then, just as these pronouncements come generally into vogue, the Crash arrives ... And then, inevitably, the "regulators" go to work ...
Their "work" does nothing at all in terms of the larger scenario. The money is gone by then. The crooks that go to jail will have no impact on the next generation of unscrupulous people. The entire event is a kind of staged public relations program desgined to keep people in the thrall of the basic government meme ... that government is a protective enterprise and on that wards off "anarchy" (which is merely the absence of government).
It is very much of a waste of time, money and man-hours. The upcoming hearings on Wall Street corruption, if they do arrive, won't prevent the abuses that will be committed during the next monetary inflation and won't have any effect on the now-thinner wallets of those who were already swept up in the money mania of the 2000s.
Politiicans and regulators will claim, sooner or later, that they have "recovered" billions for badlly duped people. But really these reparations are minimal in an environment where the US Federal Reserve can print trillions at a clip. It is simply another promotion, another theme ... that the regulatory structure works after allwhen .
Conclusion: Every financial regulation has a distortive effect that further concentrates power at the top and makes market place "fairness" even more elusive. The fairest market is a free one, not one dominated by government bureaucrats.
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Posted by Pete 8 on 12/07/11 08:13 PM
Thanks for that Agent Weebley,
IT appears to be leaving a trail of buttons! How cute they look too.
I do wonder what Lynn's up to today, Is she dating anyone?
Perhaps the SEC needs some crowd-sourced assistance too?
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Posted by 4irw4y on 12/07/11 11:43 AM
"completely briefed on this criminal activity and DOES NOTHING to stop it" - who told them that the w*r is unavoidable, the End'o'Days is coming, that Maya's gods say there's no place to pack the stuff, that Apophys is nearly destroyed the Seattle Skydish etc? They've just screwed up with Terms and Conditions, but they used to think they pay so much for the fortune-telling... so much that when others will see the bill, they can get really surprised and shocked, because it was their money. What's your choice, to watch the fortune tellers punished or to participate the execution?
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Posted by DrBryant on 12/07/11 11:22 AM
The fact that the term 'Failure-to-deliver' exists and that the condition EVER occurs in a stock transaction is the simplest proof necessary to show the entire system is corrupt.
That the Prime Brokers refuse to stop the illegal sale of stock (naked short selling), which could be prevented as easily as snapping one's fingers, gives depth to this simple proof. Allowing someone to sell something they do not own is only allowed on Wall Street; the rest of us would be hauled off to prison.
The Deposit Trust and Transfer Corporation (DTTC) giving an honest person's money to a crooked broker who fails to produce the purchased goods, illustrates clearly that the DTTC is simply a facilitator of criminal activity. There should be no surprise that the Prime Brokers control the DTTC, making millions of dollars yearly in transaction fees while the brokerage houses skim their loot from the unsuspecting public.
The SEC, mandated to oversee the activities of Wall Street and protect the general public from corruption, is completely complicit. The SEC not only allows this illegal trading DAILY, it effectively covers it up by creating bogus regulations like Regulation SHO and refusing to release relative information to the public claiming it would disrupt the smooth flow of the markets.
The Senate Banking Committee, charged with overseeing the SEC, has violated the public trust to the highest levels and their corruption is equal on both sides of the political aisle. Chris Dodd and Richard Shelby, supposedly on opposite sides of the political fence, both know equally of the tremendous destruction to upstart businesses and the loss of personal retirement funds caused by this entire scam. Even the 'above it all' Orin Hatch is completely briefed on this criminal activity and DOES NOTHING to stop it.
Without Congressional term limits, the abolishment of the IRS and Federal Reserve, and true protection under the law applied to ALL, we will not begin to stop this death spiral the USA is currently suffering.
Reply from The Daily Bell
Thanks for this insightful and professional post. However ...
We fervently hope that the death spiral is completed in order to facilitate the dawn ...
... of a new day.
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Posted by 4irw4y on 12/07/11 11:06 AM
sorry DB, hurt my typing finger, no coded messeages today, just ctrl-v like this particular one -
Click to view link . awww!w db,
stay in comments as you do in this thread.
sorry or offtop, just love those sorcha faal info re "japan service told russian service that obama wants ron paul served chilled". that's probably exactly where russian budget goes (-:
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Posted by 4irw4y on 12/07/11 10:43 AM
The price that is paid for the mission= 55 73
Reply from The Daily Bell
Yes, you like to provided coded feedbacks. But we can't remember this particular one.
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Posted by 4irw4y on 12/07/11 10:22 AM
Taken in by the delicate noise
Knocked to the ground by the subtle thunder
Shackled and bound by the sound of your voice
Wandering around in silent wonder= 73
Reply from The Daily Bell
The Sweetest Condition
Taken in by the delicate noise
Knocked to the ground by the subtle thunder
Shackled and bound by the sound of your voice
Wandering around in silent wonder
What chance did I have
With the silver moon
Hanging in the sky
Opening old wounds
Depeche Mode
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Posted by Agent Weebley on 12/07/11 08:49 AM
DB,
Putting the criminals in jail now, in line with amanfromMars' position, which should be more akin to a Turkish Midnight Express train to low cost prisonry, will work well for those inside The Crying Game ARG, but, as you say, private justice will easily take over, once the old system implodes in slow motion, so slow it is hardly noticed, and these criminals may be set free to face further private justice in one of the new ARGs that will compete for Meritocratic superiority.
And to answer your "nominee" question Agent Pete 8 . . .
Click to view link
You got in and a worm is now traveling through Metaforia.
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Posted by amanfromMars on 12/07/11 06:52 AM
Now of course is it, with IT and media weapons of mass disinformation, all out financial world warfare, East versus West, with the following old course work as the model prescription being trailed and trailed ? ... ... .
Click to view link
The current problem though is that nothing is secret anymore, nowadays, for that is the new novel transparent default position, [and so good and true a situation, was its innovation said twice to square the impact] and thus are future plans always known for leaking/sharing, and thus will old means of working requiring perfect secrecy and immaculate stealth for absolute security, fail catastrophically, with self inflicted wounds doing the dirty deeds for the mob on the cheap? ... ... . for very few indeed are able to provide that precious sort of Old Black Watch Magic. But two out of three aint bad, though, to save one from losing all ... ... http://youtu.be/quOGuEvTX8c
And a question for those to pass comment on who would disagree and wish to answer and nail their colours to a different jolly rogered mast. Tread carefully, the safety has been removed. And yes, that is a viable warning to market to markets into markets.
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Posted by Pete 8 on 12/07/11 04:14 AM
Stunning stuff!
Can anyone here answer me this question please: What is a "Nominee", historically, and in modern money mechanical terms?
Which of these is more correct a definition, regarding fraud detection please? Gloves off...
Click to view link
or
Click to view link
Advance Thanks.
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Posted by amanfromMars on 12/07/11 01:26 AM
Here is some wild speculation on the reason for the reluctance and tardiness of any substantive and forensic prosecutorial investigation of a system which lost/transferred trillions which resulted in the ongoing meltdown and financial collapse, for of course, was nothing ever fixed to changed to stop what is still going on, was it? ... ... .. Click to view link
:-) Nobody ever loses money, it is just moved elsewhere, right?
Reply from The Daily Bell
Sorcha Faal is likely American intel, as you know.
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Posted by mark on 12/07/11 12:21 AM
It means that government in one form or another has got its not so invisible hand in just about every market hence as you point out on many occasions every market is distorted, with price effected by government manipulation of demand and/or supply or in many cases a price fix. Of course free markets should exist. Just struggling to think of any free markets other than a car boot sale.
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Posted by jimmya67 on 12/06/11 10:02 PM
Off topic, but this is a pretty interesting post regarding the direct democracy meme and the Rothschilds: Click to view link
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Posted by mark on 12/06/11 06:57 PM
Shouldnt the DB refer to units of dollars, euros, pounds etc as currency rather than money. Surely it's another sub dominant social theme in the mainstream press/media that these currencies are money when in fact they are not.
Also the only free market that I can think of is a car boot sale.
Reply from The Daily Bell
Your lack of ability to think of a free market means what? That none exist? That they shouldn't exist? That we should all "grow up" and participate as best we can in the current environment? That communism is "realistic?" What?
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Posted by Pete 8 on 12/06/11 04:01 PM
By design, S.E. Sea see can at best, only uncompetetively play guacamole guantanamoney whack-a-mole:
Click to view link
A Great Lakes Great Game day: Have A.
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Posted by dreamerdick on 12/06/11 02:48 PM
The Statement that the SEC is out for the little guy is almost laughable when you look at their past history. The top swindlers are protected by the SEC or there would be fifty thousand of them in jail. The SEC will only go after the little guy like Martha Stewart caught up in trying to make a buck - never the top perpetrators of fraud and corruption on Wall Street and in Washington DC. The government is incurably corrupt at all levels including the supposed watchdog media. There are only a few small media outlets like 'the Bell' that try and expose the truth. Its time for a clean sweep of elected officials and appointed ones as well.
Reply from The Daily Bell
Unfortunately ... well put. And thanks.
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Posted by robert wheeless on 12/06/11 01:54 PM
Rating: 3.6!!
Take heart DB, this rating could only mean that SEC bureaucrats are reading your missives and tilting the score.
Reply from The Daily Bell
Well ... what else do they have to do, really?
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Posted by Don on 12/06/11 01:29 PM
"Every regulation is, in fact, a price fix"
Amen. Power money poisons food for the sake of a price fix.
"Denatured alcohol or methylated spirits is ethanol that has additives to make it more poisonous ...
Denatured alcohol is not, in itself, a preferred product-that is, it is not something which would be normally demanded if given the alternative of normal ethanol. Denatured alcohol and its manufacture are a public policy compromise. The supply and demand for denatured alcohol arises from the fact that normal alcohol (which in everyday language refers specifically to ethanol, suitable for human consumption as a drink) is usually very expensive compared to similar chemicals, being highly taxed for revenue and public health policy purposes (see sin tax). Pure ethanol would have the same health hazards as any other high concentration alcohol. As a result, if pure ethanol were made cheaply available as a fuel or solvent, people would drink it."
Click to view link
