Senate to Investigate SEC Officials......

Now that I've got a couple minutes, sit back and think about this in the arena that the economy is in shambles, and we almost, and still could, lose it all.

The SEC is "The Investor's Advocate".

The Director of Enforcement, Linda Thompsen, squashed subpoenas issued to Cramer and Greenberg by her SF office. She fired Gary Aguirre. She is being recommended for disciplinary action in the case. Now, Senators are saying she colluded with a former Dir of Enf in the matter of BSC / JPM takeover.

This is extremely serious; it's no surprise to Patchie, who four years ago stared a website "Investigate the SEC". It is no surprise to me.

But what it does, is illustrate the fact that these people coddled Wall St. for favors, AND THAT THEY HAD ABSOLUTELY NO FEAR OF BEING BROUGHT TO JUSTICE. That's about to change.

Imagine when the rubes figure this out. They'll be like their depression forefathers. They will never return to the market.

You youngsters probably don't remember when anything made in Japan was considered junk, or the fact that even as recently as the seventies, no one would even consider buying a stock. Sorta tightens up the capital markets. We're there.
 
And to belabor the point about worthless, kept regulators, check this out>>>>>>>>

http://blogs.wsj.com/deals/2008/10/...regulatory-fine-for-lehman-short-sales/print/

We See Dead People: $250K Fine for Lehman Short-Sales

Posted By Heidi N. Moore On October 22, 2008 @ 3:15 pm In Lehman Brothers, Regulators | 2 Comments

Sometimes, when Deal Journal closes our eyes, we can picture Lehman Brothers Holdings as it was when it was still alive.

We aren’t the only ones, apparently. The Financial Industry Regulatory Authority, or Finra, scores our prize for Great Moments in Delayed Reactions for its fine and censure of Lehman. As Bill Singer’s Broke and Broker Blog discovered today, Finra has censured and levied a $250,000 fine on the defunct firm, which is in the process of unwinding what it owes to creditors.

Of course, Finra, a Wall Street self-regulatory group, was investigating the complaint before Lehman’s bankruptcy filing in mid September. Finra’s complaint–all too prescient, as it turns out–was that Lehman didn’t provide enough disclosure about its short sales and didn’t do enough to distinguish between the securities firm’s own short-selling orders and those of customers.

Finra says: “The Firm’s ability to ensure the accuracy of its trade reports as to whether a particular trade was long or short, and whether a particular short sale was prohibited, was impaired and that, in some instances, this impairment resulted in flawed calculations of net positions….The Firm accepted short sales in securities for its proprietary account and customer short sale orders and, for each order, failed to annotate an affirmative determination that the firm would receive delivery of the security or that the firm could borrow the security or otherwise provide for delivery of the securities by settlement date.”

If Lehman couldn’t guarantee that it was allowed to borrow the stock or would in fact receive the borrowed share, that would count as naked short-selling, a practice that isn’t illegal but was roundly criticized in recent months.

Finra isn’t the only one to get its licks in long after Lehman’s surprising bankruptcy filing. Credit raters Moody’s Investors Service and Fitch famously downgraded Lehman to a junk rating–after the Sept. 15 bankruptcy filing.

Lehman’s bankruptcy proceedings are teeming with angry creditors trying to figure out just how much the firm had in assets, and how much they can expect to get. Considering that those creditors are trying to figure out where over $630 billion in stated assets went, Finra’s $250,000 claim is hardly the biggest concern.
 
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