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SEC’s Senior Staff/Inmates Are Running the Asylum

By Larry Doyle on June 16, 2010 at 10:45 AM in Current Affairs, SEC, Sense on Cents (Larry Doyle blog)

Any employee in any organization knows that an internal disciplinary double standard is the quickest way to kill morale. Happens all the time, right? Likely even worse in organizations with lots of bureaucracy? Uncle Sam would not know how to operate otherwise, you say? The answers to all those questions may be the affirmative, but that does not make a double standard right nor does it mean that it should be tolerated. Why do I broach this topic?

Our friends at the Project on Government Oversight (POGO) released a report just yesterday highlighting the pathetic disciplinary measures and massive double standard at the SEC in responding to recommendations from its own Office of Inspector General (OIG). POGO reports:

….this is not the first time the SEC has refused to follow an OIG recommendation for disciplinary action. A report recently released by House Oversight and Government Reform Committee Ranking Member Darrell Issa (R-CA) made note of the fact that the SEC has repeatedly failed to implement reforms or hold wrongdoers accountable. The report mentioned an investigation by POGO which revealed that the SEC has failed to act on hundreds of recommendations made by the OIG in recent years.

Following up on that investigation, we’ve prepared a new document summarizing the agency’s response to reports in which the OIG specifically recommended disciplinary action. This information mostly comes from the OIG’s semiannual reports to Congress and documents obtained through the Freedom of Information Act (FOIA). As you can see, the SEC has taken little to no action on many of these recommendations, especially when the individual cited is a senior official.

By failing to take disciplinary action against the two senior officers named in the OIG’s FWRO (Fort Worth Regional Office) report, the SEC continues to broadcast the message that senior management will not be held personally accountable for misconduct, no matter how egregious.

Just how egregious are some of the findings made by the OIG? Let’s navigate and review the report from POGO highlighting 18 separate instances in which the OIG recommended disciplinary action and in which ‘no action’ was taken. I found the following six to be the most outrageous. The OIG’s findings include (I recommend you take a deep breath first!!):

1. Disclosure of non-public information
2. Inappropriate conduct
3. Misuse of official position
4. Misuse of government computer resources to assist Ponzi scheme and violations of standards of ethical conduct. (Are you kidding me? This is not a major front page story? A Supervisor in the SEC’s Office of Administrative Services is found by the OIG to have engaged in these behaviors and is allowed to retire without disciplinary action being taken?? What a joke!!)
5. Suspicions of insider trading and appearances of impropriety in financial transactions. (In light of this reality, we should certainly not expect the SEC’s OCIE to pursue the insider trading and front running at FINRA in its liquidation of auction-rate securities in 2007!!)
6. Conflict of interest and improper solicitation of gifts.

For those interested in viewing the POGO report in its entirety, please click on the image:

Yes, boys and girls, that is your government and your tax dollars at work. Accountability? Transparency? Integrity? A ‘new’ SEC? Talk is cheap. This report is strong evidence that the senior inmates are running the asylum at the SEC.

In light of this report, is there truly any surprise how and why Wall Street has run roughshod over Main Street?

What happened to our country?

P.S. Hats off to POGO for great work!!

Peggy Sue

Hummmm. Sounds as if we’re in an echo chamber, Larry. That list you put up could be applied to what we now know about the Minerals Management Service. Which, of course, makes one wonder how many other agencies and departments and officials have been corrupted from the inside out.

You would think this would be front page news. But, of course, it’s not because it’s become business as usual. Until we rout out the rot, nothing is going to change. And all the lip flapping our politicians do on either side of the aisle is nothing more than wind.

What’s happened to our country? It’s been taken over by the hyenas.
mdmdstork

Since the government agencies are in bed with big corporations, we might as well get rid of the agencies and save billions in tax dollars. The corporations would be out of control, but they are already. I’m only being half facetious.
Larry Doyle

Peggy Sue,

Great minds think alike. Having viewed BO’s speech last evening, I wrote this morning on the similarity you point out.

At the Corner of Wall Street and the Gulf of Mexico
sowsear

This is a case of, “Who will guard the guards?”
Craig Della Penna

It would be very interesting to check and see how many of these ‘regulators’ were originally appointed by Bush/Cheney.
There was an active program in the BushII administration to appoint neocon ideologues at all levels in critical agencies (like the SEC) and then get as many as possible into the civil service (where they are almost impossible to dislodge).
I have no love for anything Obama but he (or anyone in his place) is butting their heads against a brick wall here. This ‘Fabian’ strategy was designed so that, no matter what a Democratic administration might want to change, the bureaucracy would make sure nothing ever actually happened.
It seems to be working quite well…
Larry Doyle

Craig,

Regardless of whether the regulators were appointed by Clinton, Bush, or Obama, the simple fact is Obama’s head of the SEC, Mary Schapiro is TOTALLY disregarding the recommendation of the SEC Office of Inspector General.

His watch, his head of the SEC, his lack of transparency and accountability!!
Craig Della Penna

Absolutely, no question about it. As you know, I reagrd Obama as BushIII (Lite) so this kind of perfidy is par for the course. But the Fabian aspect dovetails quite well with your Wall Street/government incest position…
LibOne

I just finished reading Harry Markopolos’ book “Now One Would Listen” about the SEC failures regarding Bernie Madoff. You would think that after the embarrassment of that fiasco they would at least try act professionally. It is clear the the SEC is filled with lawyers, incompetents and corporate stooges. The SEC does not protect the investors just the corporations.
soren renner

We have met the enemy, and he is us!

(Pogo joke.)
Larry Doyle

Yes, totally!! Incest par excellence…
carol haka

Okay – Now BP is putting up a $20B fund to take care of their disaster.

When is Obama putting up a $20B fund for those that lost our livelihood for the Financial disaster?

I need to file a very large claim.

Directions please?

>:o
Diana L. C.

And I would add that the reason none of this is front-page story material is that most main stream news organizations have similar double standards, mismanagement, and corruption.
Diana L. C.

Thanks, Larry–

I see this type of behavior rampant throughout the United States, whether it be government agencies, news organizations, businesses, and school systems are some of the worst.

I once taught in a middle school where the one psychology teacher showed up drunk quite often. His buddies in administration–they went to Las Vegas together, were in the same clubs, etc.–would cover for him all the time. No discipline, nada. A younger, new teacher, who got on the wrong side of the administration by telling some city council people about this situation was hounded regularly with classroom observations and minor marks on her record until she moved out of town.

And don’t forget the whole idea of treating the students’ opinion as just as important as the teacher’s when it comes to what is being done in the classroom. If the teacher gives credit for going swing dancing in an English class and the kids like that, it’s a valid assignment nowadays, even when it becomes a major way to pass rather than doing writing or reading.

I remember the day when managers were often told that they could NOT socialize with the people who would be working under them. They were not to develop special friendships with them so as to avoid any accusations of favoritism. Work was to remain “professional.”

Now if you attend management training courses, its all about teamwork and friendship and vague touchy-feely things like that. Too many boundaries being crossed all over the place, no sense of what works best to get things done RIGHT.

It will take a long time to change our current culture–makes me sick.

It’s not been what you know but who you know for far too long.
boonies

Diana, arent the MSM newsgathering organizations you speak of OWNED by the big OctoMegaCorp cartels that FCC regulations once prohibited from controlling?
I recall Rush Limbaugh mocking the ‘info-babe reporterettes’ on TV news and thought he was kidding…not any more.
winli

Where there is a will,there is a way! I believe!
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