SEC: Who do you protect?
“Who do you serve? Who do you protect?”
At Occupy Wall Street we chanted this at the riot police.
Yesterday, U.S. District Court Judge Jed Rakoff rejected a settlement deal that Citigroup tried to cut with the Securities and Exchange Commission, reached after the SEC accused Citigroup of selling a $1 billion package of subprime mortgage assets while failing to disclose to buyers that they were betting against half of it. The settlement would have let Citigroup off with a fine of $285 million and a promise to never do it again, without admitting or denying guilt. It would also prevent the defrauded buyers from pursuing further legal action.*
Judge Rakoff told the SEC and Citigroup, in legal language of course, exactly where they could stick it.** Thank you, Judge Rakoff. You are now my second favorite legal professional in the world, right after the badass National Lawyer’s Guild lawyer who helped me get my stuff back after the police raid on OWS November 15th.
On the PBS Newshour***, a former SEC enforcement lawyer commented on the case:
“I think[…]there would be gridlock and chaos in SEC litigation brought in the federal courts if parties were required to admit that there be some type of admission, some type of culpability, because that admission would have a collateral effect in all other litigation.
“It would take away the incentive of any party accused by the SEC to settle. So I really do think that it would be an undue burden on the federal courts. And I think one of the things that the SEC would do ultimately would consider bringing these cases in an administrative forum, which would mean probably the need to add 30 administrative law judges, which is why, ultimately, I truly believe that this is a settlement that will be accepted once the judge is satisfied about the underlying basis for the settlement as proposed.”
Who does the SEC protect? Are their litigations designed to send a clear message to financial criminals that their fraud will be punished…or to send a false message to the American people that something is being done? Given what the criminals have already been able to do and get away with, I’d say the latter.
Who does the government protect? Local governments have had no qualms about spending millions of dollars in police overtime to “protect” the public from peaceful protesters. But apparently the federal government doesn’t have the money to hire 30 administrative law judges.
To hire 30 administrative law judges would cost You the Taxpayer $4.665M/year in salary****, plus $313,012.80/year in health benefits*****, or a little under $5 million per year according to my estimate.
According to the Associated Press, police presence at Occupy movement protests has cost at least $13 million to 18 cities in 2 months.******
So which do you think is a more effective use of your tax money? Hiring enough legal personnel to actually punish those responsible for the widespread fraud that led to the financial crisis? Or paying a bunch of working-class people in scary helmets to arrest, steal property from, pepper-spray and beat up another bunch of working-class people shouting stuff and holding signs?
P.S. Occupy the SEC needs your help! You can participate in NYC or online. Make sure the regulations based on the Volcker Rule actually regulate financial institutions. Right now it’s got loopholes you “could drive a car through”, in the words of one informed commenter. Their web address is http://www.occupythesec.org/. A good article summarizing their work can be found here.