Communicating with the Division of Enforcement (Part 5)
J. Robert Brown | Sunday, November 9, 2008 at 06:15AM We recently discussed the Report issued by the SEC's Inspector General that addressed communication between top officials and Morgan Stanley about the status of an insider trading investigation against John Mack, who eventually became the financial institution's CEO. The Report discussed a comment made by Linda Thomsen, the Director of the Division, where she told a Morgan Stanley official that there was "smoke but no fire." The Inspector General referred the matter to the Chairman for possible disciplinary action.
While understanding the sensitive nature of communications about the status of an investigation, we noted that the comment made by Ms. Thomsen was a proper use of her discrection and, frankly, the right thing to do. We are pleased to see that an adminsitrative law judge at the SEC agrees. In concluding that no disciplinary action was necessary, the Chief Judge found that "[t]here are no indications that Thomsen's disclosure was committed maliciously or for gain, or was frequently repeated."
Reader Comments (1)
For instance, let’s not forget that attorney Gary Aguirre, the lead SEC investigator in the case in question, despite merit raises and great reviews, was terminated right after it starting becoming apparent that Thomsen’s just-smoke statement simply was not true!!
Remember too that one of Thomsen's crooked SEC peers later went to work for the very same law firm that employed attorney "Juice," who was representing MS. But clearly-being-controlled Judge Brenda has the gall to conclude there was no quid pro quo! Yeah right Your Honor!
And lastly, let's not forget that Morgan Stanley’s infamous John J Mack had to be the tipper who informed his buddy Art Samberg over there at Pequot about the upcoming Heller Fin-GE Capital marriage; the one Pequot – with Mack as one of its investors - made a cool $ 19 million on by shorting GE and going long Heller! And IMO, any sane person who reaches a different conclusion obviously hasn’t reviewed all the congressional testimony on this matter and otherwise researched the subject thoroughly.
What a sewerage system the SEC truly is; and anyone under the sun who defends this revolting excuse for a regulatory agency is IMO either mentally-challenged, corrupted, or just plain sadly misinformed.
Over the weekend, the “financial press” seems to be making a big deal of how wonderfully successful Reg SHO has been at combating naked short selling, and how now the Reg SHO Threshold Securities List contains well below 100 companies, way down from over 400 just months ago. What a Joke!
In Fact, in this modern computerized day and age, there shouldn’t even be a Reg SHO List!!
IMO, there are now fewer companies on the infamous List because the markets have tanked, just as the short sellers wanted them, and helped them do! So predictably, the bottom-dwelling short sellers have recently covered and booked their gains – that’s why there are now fewer victims on the List – and it’s the only reason!
IMO, it’s got nothing to do with efforts on the part of Christopher Co, absolutely nothing!
What Cox will no doubt be remembered for will be his advocating – and for no apparent reason – that the established Up-Tick rule be eliminated. And since that brilliant, US equity markets have been more volatile than ever before. Moreover, let’s be real; the recent bear raids in BSC, LEH, GS, MS, and FNM & FRE shares could have never happened with such smoothness and precision if always-grinning Cox had not wiped out that little obstacle.
To conclude, IMO thoroughly-conflicted Cox should resign immediately; he’s been a dismal failure!!
And if you think Sparky sounds unreasonable in his criticisms, just look at a chart of the Dow; for the markets are telling us loud and clear that the investment community is rightfully & rapidly losing all confidence in the integrity of US capital markets – and that’s a real shame!
Sparky