Why Did SEC “Stand Down” on Fraud Investigations?

( – promoted by buhdydharma )

In this post at Democratic Underground, EFerrari asks How much of economic meltdown is Iran Contra, continued? The writer mentioned two reports that haven’t received a lot of press: (emphasis mine)

First, there’s this from a post dated Feb. 20, 09 on Rep. Kucinich’s website Kucinich: Who told SEC to “Stand Down” on Sanford Probe?

Chairman of the Domestic Policy Subcommittee, Congressman Dennis Kucinich (D-OH) today sent a letter to Ms. Mary Schapiro, Chair of the Securities and Exchange Commission (SEC) requesting documents that could reveal which government agency told the SEC to “stand down” rather than take enforcement action against the Stanford Group in October 2006 as has been reported by the New York Times.

Recent media reports have indicated that the SEC was aware of improprieties at Stanford Financial Group as early as October 2006, but withheld action at the request of another government agency.

More….

The post on the Congressman’s website continues:

In…the February 17th edition of the New York Times, an SEC official said that an inquiry had been opened on Stanford in October of 2006. According to the Times report, an associate regional director of enforcement said the SEC “stood down” on its investigation as a result of the intervention of another federal agency…

“If the SEC did indeed begin an inquiry in 2006 and was called off by another agency, our subcommittee will demand that the SEC reveal the name of that agency which told it not to enforce federal laws which protect investors,” said Chairman Kucinich…”

Going back a few months before the SEC inquiry into allegations of security fraud against Stockbroker “Sir” Allen Stanford was “called off by another unidentified federal agency” Diarist EFerrari states that an article published on May, 2006, in Business Week reported that the Bush Administration added to the Executive’s little know power to exempt businesses from “reporting requirements”: “Intelligence Czar Can Waive SEC Rules–Now, the White House’s top spymaster can cite national security to exempt businesses from reporting requirements”. All types of investment can be risky due to fraudulent behaviour, therefore it is crucial that a trustworthy broker is chosen to do business with such as Forex Broker, you will want to look at reviews to educate yourself before taking part in the financial world.

President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations. Notice of the development came in a brief entry in the Federal Register, dated May 5, 2006, that was opaque to the untrained eye.

Unbeknownst to almost all of Washington and the financial world, Bush and every other President since Jimmy Carter have had the authority to exempt companies working on certain top-secret defense projects from portions of the 1934 Securities Exchange Act. Administration officials told BusinessWeek that they believe this is the first time a President has ever delegated the authority to someone outside the Oval Office. It couldn’t be immediately determined whether any company has received a waiver under this provision…

In addition to refusing to explain why Bush decided to delegate this authority to Negroponte…The White House wouldn’t comment on whether Negroponte has granted such a waiver, and BusinessWeek so far hasn’t identified any companies affected by the provision. Negroponte’s office did not respond to requests for comment… John C. Coffee, a securities-law professor at Columbia University, speculated that defense contractors might want to use such an exemption to mask secret assignments for the Pentagon or CIA…

So, maybe the Congress could just ask the SEC and get an answer to why they didn’t investigate people like Stanford and Madoff? Well, when the House Banking Committee tried asking about why the SEC didn’t investigate Madoff, (after multiple contacts by Whistleblower and certified fraud investigator Harry Markopolos), the SEC Lawyer Clammed Up, Citing Executive Privilege

Despite republicans and some Democrats attempts to shift all of the blame for the economic meltdown on irresponsible people taking out loans they couldn’t pay back-we’ve been finding that much of the blame for the economic crisis lies with:

Greedy Wall St. bankers and mortgage industry professionals who gave loans to anyone with a pulse.

Now we’re finding that the government itself was apparently giving cover to at least two high profile scammers-and who knows how many more crooks that were shielded by the government agencies whose mission purportedly is to protect investors from crooks and fraudulent schemes. So far, it seems that only Representative Dennis Kucinich is asking the right question: “Who told the SEC to Stand Down”?

Thank you, Congressman Kucinich–It’s time we heard the answers, and it’s time to “follow the money”.

12 comments

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  1. Commenting on SEC’s failure to investigate other possible financial fraud cases,  sefan at Democratic Underground just posted this diary:   SEC “stood down” repeatedly for those in Bush Family Circle.

    • Alma on February 24, 2009 at 10:43 pm

    We will be left to forever wonder what we could have found out if Kucinich was our president.  He’s one of the few congress people I really feel is on our side.  The side of the people.

  2. step two: step back and hand the pieces to some one else…….

    step three: buy up everything at a discount from the impoverished……

    step four: ride the pile to the bottom……

    step five: add a dash of chaos and fear to keep the ingredients seperate….

    recipe for post technological feudalism…….

  3. Thank you for this, serendipity.  Somehow, I truly am not surprised that there was a ton of “dirt” behind all of this.  I imagine so much of our 401k’s wound up in Swiss banks or the Bahamas, or you name it.  

    I hope Kucinich and others keep on top of this and get to the filthy bottom — they should all be prosecuted under the RICO Act.  

    All of these things have always represented to me the far-reaching implications of Bush’s enablement of corporations, big business, etc.

    Hard working Americans, who have worked all their lives to have just a little for their retirement, have been shafted by all of these greedy, stinking bastards that we just handed a “bailout” to.

    Americans have been shafted upside down, left and right, in every possible respect you can think of.  And it was deliberate and calculating — marginalization of the so-called middle-class — and they’ve done a fantastic job of it!  

  4. so instead of flinging them more money how about prosecuting and reinstating the laws that held the crooks in line. How about also standing up and denouncing this bs about executive privilege and state secrets. They sold debt and bet on everyones misery. they are crooks.

    I heard last night on KO that Bush signed on his last night in power, some executive order that said that nursing home owners had immunity from civil suits by declaring inspectors  federal agents or some such nonsense.

    ‘Another little surprise from BushCo that nobody discovered until yesterday. It involves nursing home state inspectors and Medicare and Medicaid contractors . Guess what they can’t do any more? They can’t give evidence in federal lawsuits. They can’t testify. Bush just took a 144 billion industry and immunized it from civil suits….

    The rule designates state inspectors and Medicare and Medicaid contractors as federal employees, a group usually shielded from providing evidence for either side in private litigation.’

    Obama better quit trying to keep this unconstitutional exectutive power while promising transparency and change. I’m from the bottom and if this is up I’m having none of it.

    State secrets is another catch all for law breaking and national security means they can do anything . Moving on until somebody restores the rule of law is just a joke.

       

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