Tuesday, August 23, 2011

Matt Taibbi: "Is the SEC Covering Up Wall Street Crimes?"

Source: Democracy Now!
Date: 8/23/2011 upload date

Here is a recent Democracy Now! interview with Matt Taibbi of Rolling Stone Magazine, who coined the term "vampire squid" in reference to the now infamous investment bank Goldman Sachs, regarding his article "Is the SEC Covering Up Wall Street Crimes?".

Editor's Note: The shredding going on at the SEC reminds me of WTC 7 (World Trade Center 7) which collapsed in on its own footprint at free-fall speed despite not having suffered a direct hit by any airplanes on 9/11/2001. According to the article "Document Chaos Isn't Sorted Out" from The Street:
Maybe no financial institution lost more critical documents than the Securities and Exchange Commission, which had its New York regional office at 7 World Trade Center. While the regulatory agency was fortunate in that it lost no employees in the terror attacks, it suffered setbacks in a number of long-running securities investigations.

In August, defense lawyers for several former executives of Rite Aid(RAD_), who've been charged by the SEC with fraud and obstruction of justice, filed a motion seeking a delay in the trial, claiming some of the documents gathered by the SEC had been lost in the attack. SEC attorneys contend many of the original copies of those documents still exist at other locations but acknowledge it will take time to reconstruct all the evidence in the case.

The SEC says the main problem it encountered was that an index for the documents in the Rite Aid case was destroyed in the attack -- not necessarily the documents themselves.

A similar reconstruction of evidence had to take place in a decade-old insider trading case against several former executives of Motel 6, a chain of low-cost motels. The SEC settled the case against the remaining defendants in June. But before that could occur, it had to obtain a court order directing the lawyers for some of the defendants to assist the SEC in reconstructing files "that were destroyed due to the events of Sept. 11, 2001."

In the Motel 6 case, the four remaining defendants, without admitting or denying the insider-trading charges, entered into a settlement with the SEC in which they agreed to pay fines and penalties totaling $798,000. In all, the 10-year case netted $6.36 million in fines, penalties and disgorged profits for the SEC.

SEC officials won't discuss how many cases may have been impacted by the terror attacks, but they claim the lost information was limited to two weeks' worth of data stored on the agency's computers that hadn't yet been backed up.

But it's clear from talking to securities lawyers who practice before the SEC that things haven't gone as smoothly as the agency would like the public to believe.

"Regardless of what the regulators say, they lost a ton of files," says Bill Singer, a New York securities lawyer, who says one case he had pending before the SEC quickly settled because so many of the original documents were destroyed. "In my opinion it was a wholesale loss of documents."