Does The SEC Lie To Senators?
Would that be OK, you think? Is it OK to perjure yourself to avoid having to admit to something being badly wrong? Or at least deliberately mislead your boss?
I took a little trip down memory lane this morning, and discovered what I consider an oldy but a goody - the case where the SEC lied, or at least misled, Senator Sarbanes of Sarbanes-Oxley fame.
So what's the deal, you ask?
In April of 2003, there were large scale settlement failures relating to a company called Jag Media. A shareholder wrote Senator Sarbanes, and the Senator requested an explanation from the SEC as to what the hell was going on. The shareholder provided a ton of documentation in the form of emails and brokerage statements from April of 2003.
Enter our hero Assistant Director of Market Regulation James Brigagliano (of the previous Sanity Check attributed quote from Euromoney about large, pre-existing settlement failures and the SEC's desire to avoid volatility for the manipulators), who responded to Senator Sarbanes inquiries with a sleight of hand worthy of Houdini. With the Senator providing April, 2003 brokerage and clearing firm e-mail evidence of settlement failures they could not address, Mr. Brigagliano dismissed the memos as issues pertaining to a corporate action taken in June of 2004 - ignoring that the e-mails/statements were dated nearly 14 months prior.
I have copies of the Sarbanes letters and the responses from the SEC. It is astounding to read the level of obfuscation that is used to misdirect the fails from 2003 as being related, somehow, and ignoring the laws of time and space, to something that happened 14 months later. And yet that is exactly what was done by the SEC, and apparently the Senator bought it, or rather never caught the BS.
Imagine explaining a robbery committed in April of 2003 as being directly related to and caused by a change in Bank Security Protocols in June 2004. Would any judge in the country let it by? Would opposing counsel allow it for a nanosecond? Would any jury not laugh it out of the room?
Of course not.
And yet that is what our hero did, with a straight face, in writing. To this day it has never been addressed. If anyone wants to contact Senators Bennett or Sarbanes and demand a clarification of why the SEC was allowed to lie, or mislead, elected officials who are supposedly due straight answers from that same regulator, feel free. And let me know what the response is. I can always forward interested parties the documents, would be happy to, in fact.
Isn't it about time we started demanding accountability from our regulators rather than intentional deceptions? Isn't it about time that the veil of secrecy was lifted, and our public servants be required to at least live up to the honesty requirements of private citizens?
Or is it just me?