Bill Black: Not with a Bang but a Whimper--the SEC Enforcement Team's Propaganda Campaign
By Bill Black - Naked Capitalism
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“Justice” became an oxymoron in the Bush and Obama administration. It now means that the elite frauds that became wealthy through their crimes that drove our financial crisis should enjoy de facto immunity from prosecution. The NYT, however, pictures the SEC as an ultra-aggressive enforcer that virtually never fails to take on the elite CEOs leading the control frauds. The entire piece is one extended leak by the SEC’s enforcement leadership which has been severely criticized for its failure to recover the fraudulent profits that elite Wall Street bankers obtained by running the control frauds. The puff piece, with no critical examination, presents these key statements.
The S.E.C. … has brought civil cases against 66 senior officers in cases linked to the financial crisis. The agency also extracted nine-figure settlements from banks like Goldman Sachs. According to new research by Stanford University’s Securities Litigation Analytics, the S.E.C. has declined to charge individual employees in only 7 percent of its securities fraud cases.My article is the first installment of a three-part series of articles correcting the NYT propaganda. This installment deals with these three sentences quoted above. Someone carefully constructed them to maximize the misleading nature of the statements. The “66 senior officers in cases linked to the financial crisis” is a phantom number without a source or useful definitions that falls apart as soon one looks at the SEC’s claims.
Here is the SEC source for the claim (note that it is posted on the SEC’s home page as part of the propaganda campaign that enlisted the NYT reporters’ aid).
How many C-suite officers of Wall Street firms were individually sued by the SEC? The SEC says it took action against the following elite financial institutions:Read the whole article here
Bank of America: No officers sued
Bear Stearns: No senior officers suedCitigroup: No officers sued
Countrywide: CEO sued, settled for “record $22.5 million penalty and permanent officer and director bar. (10/15/10)” [WKB: most, perhaps all, of the penalty was paid by Countrywide’s acquirer and insurer. According to the SEC’s complaint, the penalty represents a small percentage of the CEO’s fraudulent gains. The CEO was already retired by the time the SEC sued.]
“Credit Suisse bankers – SEC charged four former veteran investment bankers and traders for their roles in fraudulently overstating subprime bond prices in a complex scheme driven in part by their desire for lavish year-end bonuses. (2/1/12)” [WKB: None of the officers sued was close to being C-suite level.]
Fannie Mae and Freddie Mac: “SEC charged six former top executives of Fannie Mae and Freddie Mac with securities fraud for misleading investors about the extent of each company’s holdings of higher-risk mortgage loans, including subprime loans” [WKB: all six executives are C-suite or very senior.]
Goldman Sachs: No senior officers sued
IndyMac: “SEC charged three executives with misleading investors about the mortgage lender’s deteriorating financial condition. (2/11/11) – IndyMac’s former CEO and chairman of the board Michael Perry agreed to pay an $80,000 penalty.” [WKB: The penalty figure is not a misprint. IndyMac made hundreds of thousands of fraudulent “liar’s” loans and sold them to the secondary market through fraudulent “reps and warranties.” It was the largest “vector” spreading mortgage fraud through the system. The three executives sued were C-suite level.]
J.P. Morgan Securities: No officers sued
UBS Securities: No officers sued
Wachovia Capital Markets: No officers sued
Wells Fargo: No senior officers sued