As readers may have noticed, I grumbled over the weekend about the decision by federal prosecutors not to bring charges against Countrywide’s Angelo Mozilo. I attributed it to two causes: extreme deregulation (you can’t prosecute if virtually nothing is a crime) and timid prosecutors. A lively debate arose in comments, with our Richard Kline contending that the real reason no Big Name had been brought to justice is that a trial would make it all too evident that there were plenty of other powerful people who had committed equally heinous acts. Can’t expose how widespread corruption is, now can we?
Other readers argued the revolving door issue, which was (in essence) don’t ruffle the law firms that will be your prospective employers. I begged to differ, in that tough, effective prosecutors were magnets for new law school grads precisely because they were great training grounds. Someone who came out of those boot camps would be more valuable than a largely untested staff member at a regulatory agency.
I got this e-mail from someone who has seen the SEC from the inside:
You are correct on this one:
If you were a REAL kick-ass, they’d have to hire you to get you on their side! I can’t tell you how many times attorneys get hired by clients because the client winds up seeing the lawyers on the other side of the table in action and realizes they are better than the attorneys he engaged.
That is correct, but it is also part of the problem. SEC lawyers have a strong incentive to win cases, as it builds their resume, but it is far easier to win cases by way of settlements on minor charges, than by way of judgments on major charges, for obvious reasons, namely that the charged parties are much more likely to cooperate in the former case than in the latter.
Yes, major cases that set precedent are fantastic. Following the disastrous Congressional hearings on Bernie Madoff, any reasonable person would have asked how Linda Thomsen ever got to be appointed head of Enforcement at the SEC. Simple answer: she litigated Enron. Big cases are enormously important for moving careers forward, and every lawyer inside and outside of the securities industry knows that.
The problem is that litigating cases is costly, particularly in terms of time; and it is also very risky. Too many lawyers at the SEC are looking to pad resumes before moving on to private practice, and quite simply, a half a dozen cases can quickly be settled out of court in the time it takes to litigate one major case. Not only that, but the outcome of a settlement is guaranteed, the outcome of a court proceeding is not.
The commonly held perception expressed by readers on your blog as elsewhere–that SEC staff have an incentive to go soft on industry in order to land cushy jobs–is not entirely fiction, but is much less widespread than outside observers believe. And in general, that dynamic tends to apply to policy making, not enforcement, which are separate functions–and it is, in my view, a much more serious problem in Congress, where the laws are actually made, than at the regulator, where they are enforced.
The solutions are actually not difficult, in my view. The most simple is to provide more resources for litigation, which would give stronger incentives to look for more cases and carry them through. Enforcement staff are overwhelmed, and it’s easy to dismiss difficult cases while focusing on more clear-cut cases that are easier to settle.
The other solution is to provide stronger leadership direction in pushing for higher profile cases going to court. The Commission readily accedes to Enforcement’s preference for quick settlements; that certainly could change. And more (civil) cases going to court would likely lead to more criminal prosecutions, as criminal authorities seem to be reluctant to bring action on cases that are settled out of court.
One other welcome change would be to bring SEC lawyers’ pay more into line with that in industry; but that is more of a problem of industry pay being too high than SEC pay (which is reasonably generous, all things considered) being too low. That would lead directly to longer tenure among lawyers at the SEC, and better lawyers looking for jobs here, both of which would contribute to stronger enforcement. But given a severe oversupply of lawyers in the industry, I expect salaries to deflate, so that may be something that happens on its own.
Regulators get recognized only when they fail their job, not when they do their job. That’s why they pay us the big . . . oh. Wait. :( But that’s how it works for the regulator. I have several friends who work for the Nuclear Regulatory Commission–when was the last time anyone has recognized them for the work they have done?
The underlying issue is that there is no such thing as a free lunch. Americans (at least certain Americans) love to grumble about their taxes. Yet Europeans and Australians are more heavily taxed and are happier with the services they get from their governments (I heard no complaining in Oz and I circulated pretty widely; surveys confirm my impressions re Europe).
One wag remarked that maybe the reason Europeans aren’t unhappy with their government services is that their countries are better at that than the US is. That could actually be true, particularly since the game plan here over the last 30 years seems to have been to make government less competent as a justification for shrinking it further.
But a second reason is our system has become deeply corrupt, and having failed to be attentive to safeguards early on, it is not clear how to reverse that. The US has long been suspicious of career bureaucrats (even though they are the backbone of important agencies like the Department of Defense and the Department of State), yet when the are seen in their societies as an elite (think of the status held by federal judges), they can attract people with a sense of professionalism who are willing to take a bit less than private sector pay to have a stable career, demonstrably important work, and respectability. That may sound simplistic (and there are plenty of cases where the mandarin model falls short of its promise) but right now, even the not-that-successful implementations look a ton better than the revolving door between agencies of the Executive Branch and power broker law firms.
Ironically, a simple model for clean government comes from Singapore. When the island got its independence from the United Kingdom, by any objective standards, it had nothing going for it. Lee Kwan Yew recognized that. His national strategy for Singapore was for it to have a very well educated workforce and to stand out among emerging economies by being tough on corruption. He was very deliberate about the carrots and sticks he provided. Senior civil servants were and still are paid at the level of top private sector professionals (think NY or DC white shoe law firm partner). That way they would have little in the way of incentives to cheat. And it would also assure that those roles would attract the caliber of individual who could deal with major private sector players on an equal footing. The stick was that the internal audit functions were powerful and punishments for abusers draconian.
But with the new belief system that public sector workers should be paid dramatically less than their private sector counterparts (tell me again why this makes sense, absent a modest discount for a presumably lower risk career?), the odds of changing career paths and pay programs in DC or at the state level to reduce the susceptibility of bureaucrats to the siren calls of powerful private sector prospective meal tickets is zero.
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Yves,
You provided the solution for change with the following:
“When the island got its independence from the United Kingdom, by any objective standards, it had nothing going for it. ”
==> America is at a point where it — like Singapore or Egypt needs to start over and free itself from the layers of cancer-like corruption that have destroyed our society. Some degree of revolution will be necessary in order for America to move forward into this new century. America needs its independence from wall street and the mafia congress we have (as soon as possible).
Agreed, but that means a lot of people end up dead.
Would that be worthwhile, even remembering Patton’s advice (don’t die for your country. Get the other sucker to die for his.)
Regrettably, no. The one historical example is the Civil War. Which produced, not good cheer, happiness & unity, but an angry, sullen South and a smug, self-satisfied North.
Civil war is where we seem to be headed. Can anyone cite any civil war that resulted in peace & contentment? I can’t think of even one.
Yeah, but civil wars don’t break out because anyone (well, most people anyway) thought they were a great alternative, but rather, because everyone agreed that the alternative – the status quo – was even worse (and if we keep on going the way we are now, a lot of people are going to end up dead either way).
The Wiemar Republic looks like a credible future for us now. Does anybody now not think that they would have spared the world a lot of misery if they had just imploded into civil war? And they were just a bunch of provincial hicks compared to the global influence we wield now.
America needs its independence from wall street and the mafia congress we have (as soon as possible).
Congress are just puppets of Wall Street. That’s the problem.
Interesting but weak premise.
The real elephant mating in the room is the un-answered question that under-lies the whole idea of the United states of America vs. the UNITED STATES OF AMERICA.
Sure the erudite readership here knows the difference.
These 3 letter agencies answer to a whole different set of master than they purport to.
But the lie is so huge that even the best shy away. The most hardened Anti-Fedder gets their head in the sand faster than you can say Benbabwe.
But it needs to be seen in the larger context of the Big lie.
http://aadivaahan.wordpress.com/2011/02/16/truth-about-america-truth-about-us/
SEC lawyers have a strong incentive to win cases, as it builds their resume, but it is far easier to win cases by way of settlements on minor charges, than by way of judgments on major charges, for obvious reasons, namely that the charged parties are much more likely to cooperate in the former case than in the latter.
Yes, major cases that set precedent are fantastic…..
The commonly held perception expressed by readers on your blog as elsewhere–that SEC staff have an incentive to go soft on industry in order to land cushy jobs–is not entirely fiction, but is much less widespread than outside observers believe.
But the phony enforcement described above doesn’t build any reality-based resume. Any reasonable person would scoff at it, as for example Yves always does here. So if it’s not true that this “resume” is meant to be sent to the corporate complex on the other side of the revolving door, then where is it supposed to be sent?
That could actually be true, particularly since the game plan here over the last 30 years seems to have been to make government less competent as a justification for shrinking it further.
I wish you wouldn’t repeat the lie that anyone has “shrunk” government or ever intended to. Government, as a bipartisan project, only gets bigger and more aggressive. But it gets bigger and more aggressive on behalf of the corporations and the rich and against the people. Only the good civics, ostensibly public interest part of government is being destroyed.
One of the two glaring parallels between this regime and the Ancien Regime is how government is incompetent or negligent at doing anything worthwhile but overbearing in its worthless, pointless assertions of power, so that more and more people experience it as nothing but pointless oppression. The Food Tyranny bill just passed threatens a radical escalation of this worthless oppression. (And then there’s the looming insurance Stamp mandate.)
Anyone who feels oppressed, cramped, bottlenecked is realizing that the reason for this is a worthless but oppressive government, including the worthless extensions of government known as corporations. These government entities also do nothing but impose ever more taxes and regulations while providing ever fewer and worse services.
you’re such a troll. go give some more invisible handjobs.
Adroit hand-washing take down (snicker)…cruising are we…its not nice to fool mother nature…edgy chic avatar speaking w/ such manly tones…never fear skippy will hook you up with some friends K.
Skippy…its not my bag, but I know some that swing that way.
The email listed sounds a lot more on the money than the conspiracy theories, but I can’t help think the writer left one thing out. The SEC does not get the budget it needs to persue all cases to their full conclusion. AS the former insider says, these cases take a great deal of time and money and the outcome is not guaranteed. If the SEC was properly funded it would be in a better position to retain their talent and fund legal battles instead of always settling.
“SEC lawyers have a strong incentive to win cases”
Really? How does that assessment square with Judge Rakoff’s observations during S.E.C. v. BAC over the SEC’s proposed settlement for BAC’s fraudulent concealment of MER bonuses prior to the shareholder vote on the BAC-MER merger? A sampling…
“In other words, the parties were proposing that the management of Bank of America—having allegedly hidden from the Bank’s shareholders that as much as $5.8 billion of their money would be given as bonuses to the executives of Merrill who had run that company nearly into bankruptcy—would now settle the legal consequences of their lying by paying the S.E.C. $33 million more of their shareholders’ money.”
http://scholar.google.com/scholar_case?case=14424144582837922601&q=s.e.c.+v.+bank+america+rakoff&hl=en&as_sdt=2,15
“The S.E.C., while also conceding that its normal policy in such situations is to go after the company executives who were responsible for the lie, rather than innocent shareholders, says it cannot do so here because “[t]he uncontroverted evidence in the investigative record is that lawyers for Bank of America and Merrill drafted the documents at issue and made the relevant decisions concerning disclosure of the bonuses.” Id. But if that is the case, why are the penalties not then sought from the lawyers? And why, in any event, does that justify imposing penalties on the victims of the lie, the shareholders?”
Id.
“Overall, indeed, the parties’ submissions, when carefully read, leave the distinct impression that the proposed Consent Judgment was a contrivance designed to provide the S.E.C. with the facade of enforcement and the management of the Bank with a quick resolution of an embarrassing inquiry—all at the expense of the sole alleged victims, the shareholders. Even under the most deferential review, this proposed Consent Judgment cannot remotely be called fair.”
Id.
“The S.E.C. also claims it was stymied in determining individual liability because the Bank’s executives said the lawyers made all the decisions but the Bank refused to waive attorney-client privilege. But it appears that the S.E.C. never seriously pursued whether this constituted a waiver of the privilege, let alone whether it fit within the crime/fraud exception to the privilege. And even on its face, such testimony would seem to invite investigating the lawyers. The Bank, for its part, claims that it has not relied on a defense of advice of counsel and so no waiver has occurred. But, as noted earlier, the Bank has failed to provide its own particularized version of how the proxies came to be and how the key decisions as to what to include or exclude were made, so its claim of not relying on an advice of counsel is simply an evasion.”
Id. n.3.
Judge Rakoff makes the S.E.C. lawyers sound like a bunch of pussy cats, not people who want to win.
“The commonly held perception expressed by readers on your blog as elsewhere–that SEC staff have an incentive to go soft on industry in order to land cushy jobs–is not entirely fiction, but is much less widespread than outside observers believe.” We’re not wrong! We know what we see! We know what’s going on! Linda Thompson was hired because she knew the game, not because she litigated Enron. This should have been your first point, and you should have expounded upon it with examples and reasoning. Instead you buried it in the middle of a bunch of crap. You’re a former SEC lawyer — YOU DID THE SAME THING SHE DID! I’m starting to hate this blog.
Yves Smith is a former SEC lawyer?
WTF are you smoking dude?
Read the story, dbag. “I got this e-mail from someone who has seen the SEC from the inside:” There’s your SEC lawyer. The person who wrote the email used to be a lawyer at the SEC and left for greener pastures — same as Linda Thomson. Maybe if it was in French you would have understood.
I think it’s safe to say that the model of regulatory enforcement is completely broken. We have had a paradigm shift in the industry. It’s time for one in enforcement.
Wall Street has become like organized crime. So the question is, how did the FBI break the mob? It professionalized its ranks, making them incorruptible, or nearly so. It sent in moles who gave law enforcement a clear picture of what was going on and who was doing what. It had a powerful agency head who protected all levels of its staff from political interference. And it had an aura and a mission. TV shows, movies. Kids wanted to be G-men, and it was not about the money.
In short, ask yourself, how did Elliot Ness bring down Al Capone? That’s what we need to rein in Wall Street. That’s our model.
J. Edgar? That’s what you want? I think you must be a LOT younger than me. Elliot Ness, by the way, was only incorruptible in the TV show.
Wall Street has not become like the mob. A better analogy would be the cigarette industry. Think of how much more profitable Tobacco would be if lobbyists could convince politicians to defund the FDA. Wall Street’s business is not unlike Tobacco , they source product at the cheapest price and attempt to package at the highest price. The prospectus is like the warning label on a pack. Wall Street wants to make sure the warning label says as little as possible and enforcement is not there if they break the rules.
People will always leave the SEC for other jobs, but more people would stay if the pay was better. And the SEC has to go for quick wins and settle or they risk running out of scarce funding.
I,m sure there’s some regulatory capture and pressure from the Fed or Treasury ,etc to back off on certain prosecutions, but money is a big issue here and to pretend it’s not an issue and blame it 100% on corruption in my view fails to accept the realities of the situation.
One reason why the FDIC is more effective is because their funding situation is better.
“Ironically, a simple model for clean government comes from Singapore.”
Well, at least you’ve always been straightforward about your desire for authoritarianism.
Please, what tripe. Google “halo effect”. You are a walking example of a cognitive bias now turned into bogus talking point reasoning.
How does how a government manages itself have to do with its policies towards society? You see the reverse in Japan, crony capitalism/bureaucratic corruption (the securities firms were widely known to bribe politician via tipping them in advance as to which stocks were going to be promoted as “stock of the week”, it was a slam dunk to trade on the information) with authoritarian social policies (prosecutors have 99% conviction rates because suspects are beaten until they give confessions)
Have you even bothered reading recent posts? If I were authoritarian, I’d be on the side of Governor Walker trying to break both the union contract and its bargaining rights, against Wikileaks, in favor of the detention of terrorist suspects, in favor of GSE 2.0 (since it represents a continuation of government dominance of the mortgage market), and the Fed circumventing constitutionally mandated budgetary processes to save the banks.
So I gather that your view is that favoring progressive taxation and tough regulation of banks is authoritarian. I think you need a dictionary.
Do you expect banks or bank officers to be prosecuted? Take a look at who is the Secretary of the Treasury (Tim Geithner-Goldman Sachs), the Budget Director (Jacob Lew-Citigroup) and the Chief of Staff (William Daley-JP Morgan Chase). Let’s face it. The banks are a huge source of political patronage and that’s why nobody has been prosecuted for this fiasco. The banks are very glad to hire those who have served them well in office.
The bankruptcy trustee sues JP Morgan Chase because of its complicity in the Madoff scandal. Does the government do anything as a result of potential money laundering? Absolutely not. The Obama administration people are looking out for their futures. Not prosecuting JP Morgan Chase, Citigroup and Goldman Sachs is likely to result in large future rewards.
Sorry, but I’m skeptical.
First of all, I don’t understand why settling a lot of easy cases should impress a top law firm, if indeed what impresses them is outstanding skill.
Secondly, it seems to me the best and most aggressive law enforcers are never primarily motivated by money. They tend to be the kind of people whose spirit would die if they had to work in support of a corrupt organization.
In fact, most of us would much prefer doing something we can believe in rather than something that makes us feel dirty.
I believe the problem at the SEC, as with many government agencies, lies at the top. Good, aggressive staff is drawn to (and often literally loves) a leader who is just like them, and who encourages them and protects them from political efforts to hobble them. And a leadership that doesn’t want to rock the boat will find reasons to reject any job applicants who don’t “fit in.”
This has always been clear to see for years – that the agencies are captured and do what they’re told. In truth, these guys are under considerable pressure to do what they are told, I like the passing discussions on what motivates this mode of operation. I think some SEC lawyers already consider their Government jobs as the proverbial “greener pasture” and simply don’t want to fuck that up by offending the industry. I don’t believe the budget issues are an issue in why the SEC won’t do it’s “imaginary” job. Look at the Defense Contractors lining up to feed at the trough to “modernize” the SEC’s infrastructure, even if nothing gets done – it is extremely lucrative.
“Take a look at who is the Secretary of the Treasury (Tim Geithner-Goldman Sachs),”
Tim Geithner has never worked at Goldman Sachs. In fact, he’s never worked for any Wall Street firm. Put the conspiracy theories away.
F. Blair said: “Tim Geithner has never worked at Goldman Sachs. In fact, he’s never worked for any Wall Street firm.”
Perhaps not in an official capacity, but this is quibbling, a matter of semantics. All right, if you prefer literal accuracy, then let’s say Turbo Tax Timmy is an errand boy for GS and Wall Street.
TG hasn’t worked for GS…yet.
Why not just give SEC attorneys a percentage of the fines for a successful prosecution plus an extra bounty on criminal convictions? Why not make the SEC itself a lucrative career so there would be little temptation to move to private industry?
Still, I would bet that fundamental reform in money creation would do more to ensure an honest and stable financial system than any amount of regulation.
F. Beard is right. I had a similar thought this morning. Whistle-blowers get a substantial financial reward for “doing the right thing.” Why shouldn’t regulators?
Unfortunately, whistle-blowers don’t usually get rewarded. In fact, Obama has greatly increased prosecution and harassment of past whistle-blowers, because they inconvenienced or embarrassed his idol, George W.
Full disclosure: I have never worked at the SEC. However, I have been “on the other side of the table” from the SEC for 36 years.
The SEC almost invariably selects insigificant cases to pursue and settles them quickly. Most of its lawyers have no understanding of evidence and couldn’t try a case if their lives depended on it. The go to the SEC for 3-5 years, get their tickets punched, then leave for law firms which they gave “passes” to as SEC employees. The SEC needs a housecleaning from top to bottom.
The SEC has enough money to do its job. It needs to reallocate resources. I had a client with $196 in assets and 32 stockholders, a shell, get an SEC comment letter. Why is the SEC even looking at registrants with less than say $250 million in market cap? Why? Because by spending time on obscure, non-connected firms, it can avoid looking at large connected ones.
My bottom line: anyone at the SEC who worked on Wall Street or for a NY BigLaw or Big 87654 firm at any time in the last ten years should be exited. Now. “But the SEC will lose all that valuable expertise”. Are you kidding?
Do you think the system would be better off with no regulation whatsoever? I ask because I am gradually coming to think that everything eventually gets gamed and corrupted. Thus, since Wall St.’s main occupation apparently is to game the system, the best thing is just to take away the game, i.e. end the charade that there are any rules at all. This means closing the SEC. The system then goes back to Laissez-faire and everyone must rely on their reputation to survive—which means apart from the microsecond trading and other shenanigans, Wall St. goes under because they don’t have a shred of good reputation left. If you, or anyone else here has any thoughts I’d like to hear it.
I am beginning to wonder the same thing, although it would only work if we actually allow them to fail. That way the bad actors vanish periodically and only the actual strong survive instead of the politically strong.
I suspect that we will have another bite at this apple over the next 2-3 years.
I think the prospect is not for civil war but for further irreversible decline and immiseratation. The tag on the original post included “banana republic” which pretty much says it all. Me, I think the real cause is demographic and the pending minority status of white people in the U.S. and all goes back to Prop 13.
The SEC is an important element of the con. It gives the impression that there is a regulatory apparatus out there when, in fact, there is none. Ineffectual regulation is useful to our looting elites as a distraction. We are left discussing whether the SEC is doing its job or if it is doing its job well enough. Well, the SEC is doing its job and a very good one at that. It is meant to blow smoke at the rubes and give cover to the looters, and it does. It is pure kabuki, the appearance of regulation without any real regulation. It is a Trojan horse. It portrays itself as on the side of reform, of the people, but it is really just an instrument of Wall Street meant to screw over those selfsame people as much as possible.
There are two mechanisms to revitalise the SEC:
1) Whistle blowers get 15-30% of fine imposed, a la IRS;
2) A portion of the fine is also distributed to the investigative team.
This should focus minds on large and winnable cases.
In a single paragraph Hugh managed to say pretty much everything that anyone needs to know about the SEC.
There’s a pattern which connects all of this, as Hugh has pointed out a number of times before:
from Wikipedia: KLEPTOCRACY
Kleptocracy, alternatively cleptocracy or kleptarchy, from Greek kleptes (thieves) and kratos (rule), is a term applied to a government that takes advantage of governmental corruption to extend the personal wealth and political power of government officials and the ruling class (collectively, kleptocrats), via the embezzlement of state funds at the expense of the wider population, sometimes without even the pretense of honest service. The term means “rule by thieves”.”
The only question that remains is how long will the ruling thieves bother with “even the pretense of honest service”?
Gimme Singapore’s culture on government any day over what we’re laboring under in the US.
Great post.
Yves,
Again, your analysis of the financial system is good, but when it comes to system implementation, in this case, governmental service, you ignore the role culture play in what kind of system can take hold and in what form. The US has always had a poorly run governmental structure, but this doesn’t mean that govermental structures can’t work–as they do in some other countries. But a big difference between those countries and the US is that many of their talented members are more likely to join governmental ranks than they are here in the US–the notion of invidividual liberalism and governmental structures are going to be inhereiently at odds with each other. Mainland Europe has a history of authoritarianism as does Aulstralia (as it was founded under the extreme authority of a penal colony; although it has its wild side too).
These differing cultural beliefs are constantly over looked, with both sides arguing universal approaches: government can work anywhere or government can’t work anywhere. What we actually see, though, is that governmental works in some places at some lengths of time, and in others it is precarious and unweildy.
Even our best attempts to measure the job impact of the stimulus spending make this clear. In November of 2010, the CBO estimated that the stimulus had created between 1.4 and 3.6 million jobs. Not a very precise estimate.
Hate to be politically incorrect, but Europe and Singapore have homogeneous societies whereas we have a patch work of people, mostly unattached to the US and living here for the money and that’s why their govt works, ( plus having two world wars at your doorstep kinda focuses ones attention one whats really important)
Singapore is most assuredly NOT homogeneous. It has Chinese, Indians (a large district), Malay, and a lot of Commonwealth types, mainly Brits. The white people are the smallest group, the Chinese, Indians and Malay roughly equal.
And a few token Aussies!
Aussies are honourary whites, aren’t they?
simple answers, really..we all know what they involve=
$$$$ is not speech
$$$$ is property
no corporate, private, union contributions to the political system CURES ALL..
but it doesn’t sound like people are really looking for cures..not suffering enough yet?
Some years ago now, Canada illegalized corporate campaign contributions…
Canada isn’t going through all this, to take the international perspective..having lived in Europe, though U.S. media agenda is deranged enough to attempt to misrepresent what is, Europe is doing much, much better than states-highly regulated..
perhaps people should check out (again) Yves’ second chapter-“ECONNED”..
While I always like to hear nice things about my home (ie Singapore) you do realise the reason why the government is able to implement such strong laws and punishment against corruption and the pay scheme for the civil service is due to the ruling party’s strength? Also the reason why the internal audit is so strong is because of some rather tough regulations and less regard for people’s right to privacy.
Even in Singapore there are some people to begrudge the ministers their high pay and bonuses linked to things such as GDP. And we do have some people agitating for a more open political society. I do believe that trying to replicate what works in Singapore has to be done wholesale (ie the various componenets have to be introduced at the same time) and would be very very hard to ram through in the current political environment
A few years back I interviewed for a job with the SEC’s Los Angeles office as an enforcement attorney.
I was told during the interview, by SEC attorneys, that there were plenty of securities fraud cases out there, but that the SEC only took on the easy cases it thought it could win without going to trial.
It did not have the resources to go after everyone, so these SEC attorneys told me it was policy to get the most “bang for the buck” by prosecuting many easy cases, instead of those cases that were more difficult to prove. I was told the SEC would only prosecute cases that it thought could be won on summary judgment.
What I got from the interview was that the SEC did not want to tie up scarce resources with trials. To me, the shocking part was that the SEC admitted there was so much fraud out there that it would only go after the easiest cases. How about we give them enough money so they can go after everyone?
This wasn’t so that
i’m from Singapore…
Yves, the population ratio is ~70% Chinese, ~20% Malays, 5% Indians and 5% others; this ratio is actively managed through the govt immigration policy. If you think about it, it’s sort of weird because as a whole, the Singapore birth rate is currently at 1.16- if i’m not wrong, it’s just one or two rungs above Russia. The low birth rate is largely skewed by the Chinese population having 1-2 kids, while the Malays and Indians continue to have persistently higher birth rates… I don’t know what others might think of it and I’ll just keep my comments to myself.
Secondly, it is true that the Singapore govt policy is to offer politicians around the equal wages of the private sector; from what I’ve heard, our govt takes the average of wages from the top 5 professions and uses that as a benchmark… as it turns out, our Members of Parliament gets paid at least US$785,000/yr (SG$1m), excluding any director’s fees they might get from sitting on partially govt owned corporations; i.e. Temasek Holdings, Singapore GIC.
There is also a govt agency called “Corrupt Practices Investigation Bureau” (CPIB) that focuses solely on investigating civil servants on corruption; this agency also reports directly to the Prime Minister’s Office.
What I’m trying to say is this; while corruption is close to zero in my country, from what I know from my friends is that there is very little respect for politicians from the general public when they are getting paid that sort of money to hold govt posts. However, the general sentiment I get is that so long as the govt does a decent job of growing the economy, the people will accept their governance.
As an aside, there is also the interesting question; why is the Singapore govt paying such high wages to politicians? There is a prevailing view that because few are willing to go through the political system to become a politicians and instead, carve their careers in the private sector, the govt has to offer them at least equivalent wages to attract them in.
This of course creates doubt in the general public as to whether the politicians that come from the private sector really have the interests of the public sector and whether they really have a good grip of certain political sentiments and reality; “so far its okay” is the general sentiment.
Also, because most of them come from the private sector, they tend to bring right-wing/capitalist ideology with them; it is no surprise that from what I know, Singaporeans think that their country is run like MNC rather than as a nation-state; again, this is a political problem that has yet to turn into a bigger one, largely because the country has grown steadily for the past ~30yrs. From my view, we just rode the wave of capitalism.