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Keystone Kops

By Larry Doyle on March 10, 2009 at 8:00 AM in Current Affairs

From my new blog, “Sense on Cents.”
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On the heels of the Bernie Madoff fiasco, there was massive pressure on the gross incompetence displayed by the SEC. Not unlike a police department that is under fire, the SEC needed a high profile case to gain a measure of vindication. Enter Allen Stanford and Stanford Financial.keystone-kops1

I am not here to defend Allen Stanford nor any of the activities that transpired in his offshore bank located in Antigua. However, the SEC also froze the assets of all clients housed in Stanford Financial’s brokerage operation based in Houston.

Unlike Bernie Madoff, who did not employ a custodian, the bulk of Stanford Financial’s assets were housed at Pershing Financial, one of the largest custodians in the business. While the concerns revolving around Stanford are in the Caribbean, the SEC’s act of freezing ALL customer accounts has been the death of this brokerage entity. Hundreds of legitimate jobs have been eliminated. Thousands of customers have faced unnecessary and undue financial hardships since February 17th as a result.

At long last, these customers have gotten a reprieve as a federal Judge Releases $500 Million in Stanford Assets. Will the media expose this travesty? Will the employees of Stanford Financial receive just compensation for the unnecessary shutdown of their business? Will the customers be made whole for the emotional stress and financial strains they have experienced?

Thanks to Harry Markopolos’ efforts, all of America knows how incompetent the SEC was on the Madoff saga. It would be overly optimistic to think that a new SEC chair would quickly change the degree of incompetence. Ms. Schapiro, the new SEC chair, did not have much of a track record herself at Finra. Given the federal judge’s order to release the customer funds which had been frozen by the SEC, it would appear that Ms. Schapiro and the new regime at the SEC are picking right up where the former SEC operation left off.

LD

photo courtesy of Flickr

  • Elliott

    This seems to be another part of this administration’s inability to deal with anything and the public’s frustration with incompetence mixed with dithering. I had an uneasy feeling with Stanford saga that an attempt was being made to switch the public’s attention away from the biggies to a scapegoat. The longer no plan is initiated the worse it all becomes. I am sorry to say that I have this growing notion that all is being delayed to complete the heist and to keep regulators out so audits cannot begin to find the stupidity, criminality or both.

  • jwrjr

    So the SEC needed to manufacture the appearance of vindication and in the process “threw out the baby with the bath”. This gives you lots of confidence in the SEC (and anybody selected by The One), doesn’t it?

  • Sassy

    LD, I haven’t followed this particular case, but during the Madoff hearing, the SEC came across as totally inept and inane.
    I have seen the same type of performances from the FCC.
    Nepotism and cronyism are in, while competence is passe!