Relevant and even prescient commentary on news, politics and the economy.

Expounding on To Big To Fail, SEC Policy, DOJ prosecution action

Linda posted here on To Big To Fail and made suggestions as to how to fix it. I want to just add some more background information to the discussion.
Via Bob Swern at Daily Kos who linked to a post by Pam Martens at Wall Street on Parade comes a bit of transcript from the confirmation hearing for Mary Jo White for the SEC. 
Senator Brown: When you were U.S. Attorney, my understanding is you consulted Bob Rubin and Larry Summers when considering whether to bring charges against financial firms. Is that correct?

White: I actually consulted the Deputy Attorney General who had Mr. Summers call me back. I was asking a factual question.

Senator Brown: Did they reject the argument that institutions could not be prosecuted to the fullest extent of the law?

White: I’d like to answer that yes or no but I can’t. Essentially, I was seeking information based on an argument that had been made by the lawyers for the institution that I ultimately indicted, as to whether an indictment of that institution would result in great damage to either the Japanese economy or the world economy. And the answer I got back is that I should proceed to make my own decision; which I took to mean that it would likely not have that impact.
Pam then notes:
There actually is an official policy but its finer points have certainly not been expanded upon by either Attorney General Holder or SEC nominee Mary Jo White. The policy is called Title 9, Chapter 9-28.000: Principles of Federal Prosecution of Business Organizations.* The policy thoroughly advocates the prosecution of corporations — especially when there is a serial history of fraud as in the case of Wall Street.
She quotes from the policy:
“…Virtually every conviction of a corporation, like virtually every conviction of an individual, will have an impact on innocent third parties, and the mere existence of such an effect is not sufficient to preclude prosecution of the corporation.”
Just saying.
*The link for the actual policy is in Pam’s article.

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… to Hold “Untouchable” Fraudsters Accountable

By Jeff McCord, The Investor Advocate

Take Lincoln’s Approach to Hold “Untouchable” Fraudsters Accountable

Within recent months, two media events captured the attention of many Americans: the premier of the Spielberg movie “Lincoln” showcasing the 19th century federal government’s ability to end our nation’s crime against humanity; and, the airing of the PBS Frontline series (“The Untouchables”) showcasing the inability of the twenty-first century federal government to prosecute those responsible for our nation’s largest financial crime spree.

Now, the public watches mindless budgetary slashing of federal regulatory agencies – already underfunded and understaffed – charged with enforcing civil and voting rights and financial laws. And this “sequestration” proceeds at a time of widespread attempts to suppress people of color’s ability to cast ballots in federal elections, and financial fraud and abuse robbing and cutting the savings and assets of tens of millions of Americans.

Half Billion Dollars to be Cut from Fed Investor Protection, Law Enforcement

Aside from federal civil and voting rights programs, investment law enforcement agencies and commissions on the chopping block include the Securities and Exchange Commission (a possible $115 million reduction), Commodity Futures Trading Commission ($17 million), federal courts ($384 million at risk), Public Accounting Oversight Board ($18 million) and the Securities Investor Protection Corporation ($23 million). In sum, $557 million could be cut from investor protection programs, barring Congressional intervention. For more, see Appendix A of the Office of Management and Budget report issued September 15, as required by The Sequestration Transparency Act of 2012

In this environment of federal inaction and cut-backs, it has never been more important for private citizens and investors to be given the legal tools and authority to protect themselves.

Lincoln Knew How to Deter Fraud: Hit Wrongdoers in their Pocket Books

During the Civil War, Lincoln adroitly dealt with rampant fraud by Union Army contractors by empowering ordinary citizens with knowledge of the crimes to take civil action against wrongdoers on behalf of the government and themselves. Often called the “Lincoln Law,” the federal False Claims Act was modernized in 1987, with Republican Senator Charles Grassley leading the effort. Since then, whistleblowers acting under its authority and protection have recovered more than $40 billion of taxpayer money otherwise lost to fraud and abuse against federal and state governments.

Nine billion dollars was recovered by citizens blowing the whistle during just one year (2012). Compare that with the Securities and Exchange Commission’s total of only $2.6 billion in funds recovered for investors from financial wrongdoers during the past three years during which people on “Main Street” have become painfully aware of their being fleeced by Wall Street.

What’s good for the taxpaying public would also be good for the investing public whose own personal funds are on the line. Although the withering federal government portion of the nation’s GDP (7 percent in 2012) is surprisingly close to the financial services industry’s contribution (5 percent), citizens can take very effective action against thieving federal contractors, but remain vulnerable against those who rob them of their homes, savings and investments.

Private Class Actions Recovered Three Times More for Investors than SEC
True, citizens can and do band together into class action lawsuits to take action against financial robber barons and such civil actions have won $7.9 billion from wrongdoers in the past three years – three times the amount the SEC recovered during the same period. (See: here)

But, the class action remedy has been under an unremitting attack by corporate and financial lobbyists for almost two decades and has been trimmed and nearly hobbled by Congress and the Courts, with some notable exceptions, during the very period that may best fit Lincoln’s prophesied “era of corruption”:

“I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country….corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed.”

Corporations and Lincoln

So, where are we to turn to recover some of the wealth wrongfully “aggregated” from the many by the hands of the few?

Restore Private Accountability for Aiders and Abettors of Investment Fraud

Certainly, securities class action lawsuits filed by pension funds, retirement plans and individuals against corporate and financial wrongdoers will continue to recover investor losses and nip at the heels of Lincoln’s “money power.” Private class actions could accomplish more to deter fraud and recover investor losses if Congress would overturn a misguided Supreme Court decision by restoring private liability for those who knowingly aid and abet securities fraud.

One early version of the Dodd Frank legislation would have done just that. Banking and accounting industry lobbying, however, killed that provision. Restoring accountability for aiders and abettors is a no-brainer that Congress can still accomplish.
Fortunately, the final Dodd Frank Act did provide an opening for authorizing a “Lincoln Law” providing financial whistleblowers with the policing power to help hold Wall Street accountable and recover ill-gotten gains.

SEC Takes “No Further Action” on Majority of Whistleblower Leads

Congress provided for a “whistleblower” program within the Securities and Exchange Commission enabling people with inside information to contact the Commission. Those providing leads retain anonymity and can win monetary rewards. Despite receiving more than 3,000 leads in 2012, however, only one whistleblower has won an award ($50,000, an amount only equal to an annual bonus for a relatively low level Wall Street employee).

In any event, the SEC takes “no further action” on 69 percent of whistleblower complaints, according to a recent report by the SEC’s Inspector General. The most common leads reported to the SEC relate to fraud and abuse in areas of systemic wrongdoing largely responsible for the financial meltdown: corporate disclosures and financial statements (18.2%); public offerings (15.5%); and, market manipulation (15.2%).

Powerful Senators (and the Public) Frustrated

The comments of two frustrated Senators during a 2010 hearing demonstrate that some powerful Members of Congress do understand what the public understands: big financial services malefactors are virtually “untouchable”:

Sen. Carl Levin (D-Michigan): “I believe in a free market. But if it’s going to be truly free, it cannot be designed for just a few people. It must be free of deception. It’s got to be free of conflicts of interest. It needs a cop on the beat, and it’s got to get back on Wall Street.”

Sen. Charles Grassley (R-Iowa): “If heads don’t roll, nobody makes any changes. I’m disappointed that in all of the wrongdoing that went on and all the fraud that went on, that there wasn’t an effort to go after bigger fish than the evidence shows they [federal government] went after.”

Transcripts PBS

Well, heads haven’t rolled Senator Grassley and, Senator Levin, there is still no effective cop on the Wall Street beat.

Congress Should Trust and Empower Lincoln’s “People”

Now, its time for Lincoln’s “government of the people, by the people and for the people” to actually empower the people.

First, Congress should restore the right of people to hold accountable those who knowingly aid and abet frauds that rob them.

Next, Congress should enact a real financial “Lincoln Law” empowering whistle blowers with the tools to catch the “big fish” on Wall Street and make them pay back what they have stolen. And, recoveries should be returned to the investors harmed by the underlying fraud and abuse whistleblowers uncover.

The False Claims Act now on the books authorizes treble damages for those who defraud the government, providing a real deterrent. Moreover, the whistleblowers (termed “relators”) who win their civil actions against fraudsters can be awarded up to 30 percent of funds recovered – a powerful incentive for Wall Street managers who know where the bodies are buried to go after big time wrongdoers.

Time for a Financial False Claims Act

A “Financial False Claims Act” should do the same by authorizing Wall Street whistle blowers to take actions independent of often conflicted government regulators against fraud perpetrators “too big to jail.” Such a law could also authorize the government to intervene in support of such civil actions, if they wish to do so. This is how the False Claims Act works.

Unfortunately, worried that a real whistleblower law could complicate the SEC’s program, the Commission’s inspector general has concluded that it is not the time to:

[empower] whistleblowers or other individuals . . . to have a private right of action to bring suit . . . on behalf of the government and themselves, against persons who have committed securities fraud.

SEC audits inspections

If not now, when?

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Lanny Breuer and Mary Jo White. Or Is It, Lanny Breuer versus Mary Jo White? Or is it neither?*

BREUER: “If you look at what we and the U.S. attorney community did, I think you have to take a step back. Over the last couple of years, we have convicted Raj Rajaratnam, one of the largest hedge fund leaders. Now, you’ll say that’s an insider trading case, but it’s clearly going after Wall Street.”*

Oh, we get it.  It’s a semantics game.  Anyone connected with the finance industry will do as a prosecution target, as long as he wasn’t a top executive at a mega bank, a mega investment bank, or a mega mortgage company.  He works on Wall Street!  We went after Wall Street!

What’s next? A claim that they prosecuted the head of the asphalt company that repaved Wall Street, for tax evasion or something?

BREUER: “First of all, I think that the financial crisis is multifaceted. But even within that, all we can do is look hard at this multifaceted, multipronged problem. And what we’ve had is a multipronged, multifaceted response.”*

Actually, there seems to be a major facet missing in their approach.  Which was the point of the expose.

All that said, I just think there’s something more that was going on there than just Lanny Breuer’s and Eric Holder’s desire to return to Covington & Burling after their Justice Dept. stints.  For one thing, most top white collar crime defense attorneys began their careers as federal prosecutors and made their names in high-profile cases.  They know how to defend in white collar criminal cases, precisely because they successfully prosecuted some complicated ones.  So prosecuting big-name Wall Street execs would not have hampered their option to return to big-law criminal defense work.  

For this reason, I think the criticism of Obama’s selection of Mary Jo White as SEC head is off-base; she was known as an extremely aggressive head of the Manhattan U.S. Attorney’s Office, and do think Obama’s decision to nominate her is intended to indicate a toughness toward the finance industry.  Yes, she’s been representing finance industry companies and execs in criminal-law matters, but because of that, she now knows all the more how the inside game is played.  And the better she is at the SEC job, the more desirable, not the less desirable, she’ll be to the big Wall Street law firms.  It’s counterintuitive, and of course exactly the opposite of people who work in regulatory agencies such as the EPA leaving to become lobbyists.  But what matters in this situation, less, ideology than actual knowledge

This is not to minimize the potential and maybe real conflicts of interest that result from the passage back through the revolving door to high-level law enforcement and regulatory positions after time spent on the other side of that door.  But I think that’s because of friendships–personal relations–rather than a surely-unrealistic fear of having trouble returning to Big Law, for really big bucks, when the time comes to pass back through the revolving door once again. 
Ultimately, I just don’t think Holder and Breuer were the ones deciding to not even investigate the big boys.  I think that was more likely a policy decision made elsewhere in the administration.  I don’t think Geithner picked up the phone and called Holder or Breuer. Nor, if he did play a role in these decisions, do I think he even thought he was doing anything other than protecting the economy. Same for Obama, if my hunch is right that Geithner had some influence on these decisions, via Obama.
But I guess there’s no way for us to know the inside story. At this point, anyway. And I do agree with the New York Times today in an article by Ben Protess and Benjamin Weiser that Obama seems to be trying to signal a new day.

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* From The New York Times would rather cover a Breuer chair than cover Lanny Breuer, by lambert, at Corrente. H/T, reader rjs.

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*POSTSCRIPT:  The New York Times article notes specifically that White “defended some of Wall Street’s biggest names, including Kenneth D. Lewis, a former chief of Bank of America,” and that “[a]s the head of litigation at Debevoise & Plimpton, she also represented JPMorgan Chase and the board of Morgan Stanley.”  So she’ll have to recuse herself from matters that touch upon issues related to the cases she worked on for those execs and banks or that rely in any respect on information she gained through those representations.

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Deregulation Without Cultivating Better Rules

Top bank lawyer’s e-mails show Washington’s inside game at Bloomberg shares insights into how regulation is impacted when regulators and the industry regulated share too much.

Pruning Hedge Fund Regulation Without Cultivating Better Rules By Jesse Eisenger, ProPublica at Dealbook, NYT also writes on the SEC and de-regulationscommercial water slides for sale.

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But then again…

I can’t help but compare Yves Smith’s appraisal of SEC performance and either party’s political attitude to the previous post by Peter Henning:

If you merely looked at the SEC’s record on enforcement, you’d conclude that it suffered from a Keystone Kops-like inability to get out of its own way. The question remains whether that outcome is the result of unmotivated leadership (ex in the safe realm of insider trading cases) and long-term budget starvation leading to serious skills atrophy, or whether the SEC really, truly, is so deeply intellectually captured by the financial services industry that it thinks industry members don’t engage in fraud, they only make “mistakes”?

It’s sure looking like the latter. We’ve railed repeatedly on the refusal of the SEC to use an obvious tool, Sarbanes Oxley, to pursue not only the massive failings of these firms to install adequate risk controls during the crisis, but also to go after obvious recent cases, namely, the JP Morgan CIO losses and the MF Global collapse.

Further confirmation comes today in the form of investor abuse and repudiation of Dodd Frank requirements that the SEC hopes to slip next week when hopefully no one will notice.

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Is That It for Financial Crisis Cases?

Peter J. Henning, a colleague of Linda Beale, poses the question in the NYT:

Is That It for Financial Crisis Cases?

Last week turned out to be a good one for Goldman Sachs. The Justice Department closed a criminal investigation of the firm and its chief executive, Lloyd C. Blankfein, and the firm disclosed that the Securities and Exchange Commission had decided not to pursue a civil fraud case related to a subprime mortgage deal.
When the story of the financial crisis is finally written, this may turn out to be the denouement of the government’s investigations of Wall Street for potential wrongdoing that contributed to the financial crisis in 2008.

Investment banks like Goldman load their disclosure documents with plenty of generic disclaimers that can support a defense that no one sought to mislead buyers. It may not be so much a matter of weak laws as the requirement to show beyond a reasonable doubt that a defendant had the intent to commit a crime, a significant barrier to successfully prosecuting any fraud case.
And proving a perjury case is even more difficult because it must be shown that the defendant intentionally lied, not just that the testimony was incomplete or inaccurate. Whether Goldman’s position was “massive” or not looks to be a matter of degree, making it almost impossible to prove perjury.

The S.E.C.’s decision was a bit more surprising because the enforcement division told Goldman in February that it planned to recommend civil charges against the firm related to its sale of a $1.3 billion mortgage-backed security. Goldman had already settled allegations in 2010 about how it structured a collateralized debt obligation known as Abacus, so even if the S.E.C. had pursued another case, it was unlikely to contain any major new revelations about systemic misconduct.


It does not look as if any other criminal cases against other banks are likely to emerge from the financial crisis now that four years have gone by. The Justice Department has already passed on cases against executives from firms like Countrywide Financialand the American International Group, and nothing else seems to be drawing the attention of prosecutors at this point.

New laws would not make it any more likely that senior executives could be pursued unless they included liability as a “responsible corporate officer” for the conduct of underlings without having to prove an executive’s knowledge or recklessness.
Wall Street would be sure to put up quite a fight if expansive criminal prohibitions were introduced that made it easier to prosecute senior managers for the violations of lower-level employees. The pushback in Congress against the Dodd-Frank Act’s regulation of the financial sector shows that there may not be much appetite for additional government involvement in the financial sector.

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All in one day of reporting…

This is just one days reporting from various sources. I thought I would pass them along. On the face of it perhaps the story line is clearer to even regular folk:

JPMorgan Said to Hire Ex-SEC Enforcement Chief McLucas for Loss Probe
By Joshua Gallu and Dawn Kopecki

JPMorgan Chase & Co., the biggest U.S. bank, has hired former U.S. Securities and Exchange Commission enforcement chief William McLucas to help respond to regulatory probes of the firm’s $2 billion trading loss, according to two people with knowledge of the assignment.

The lender’s May 10 announcement of the “self-inflicted” loss spurred reviews by the SEC, Commodity Futures Trading Commission, Office of the Comptroller of the Currency and Federal Bureau of Investigation. JPMorgan has said the losses may increase. Kristin Lemkau , a company spokeswoman, didn’t have an immediate comment on the hiring. The people requested anonymity because the appointment hasn’t been made public.

Via the Real News comes this headline J.P. Morgan Funds Senate Finance Chair, Even Bigger Problem in the Wings

ome and testify and explain how they lost $2 billion. There’s a problem here. Who is Senator Tim Johnson’s largest campaign contributor? Well, that’s people associated with JPMorgan. So file this under the category as you can’t make this stuff up, as Tom Ferguson said to me…

Bloomberg reports a change in the way the SEC and businesses relate:

+ The U.S. Securities and Exchange Commission, long known for settling enforcement actions without having to prove its case in court, is struggling to cope with a surge in the number of executives and companies willing to go to trial to defend themselves.

+The SEC’s office in Washington is actively litigating about 90 cases, up more than 50 percent in the past year, Matthew Martens, the SEC’s chief litigation counsel, said in an interview. At the same time, Martens’ trial unit staff has stayed relatively flat at about 36. He recently added three more lawyers to his group and is looking to hire more.

+The wave of litigation has two main sources: more complex cases stemming from the 2008 financial crisis and a related increase in lawsuits filed against individual executives.

+Martens said it’s critical that his unit present a credible threat. “At the end of the day, if we can’t win cases, then people don’t settle. That’s the reality,” he said.

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The “JOBS” bill today

Simon Johnson points us to more information on the JOBS bill (see link) and a Senate vote today:

As it currently stands, the “JOBS” bill now before the Senate would gut investor protection in the United States. The title of the bill is a complete misnomer – anything that weakens investor protection makes it more risky to invest in companies and increases the cost of capital to honest entrepreneurs. (For more background on the bill and links, see this piece.) 

… 

Specifically, Senator Reed’s amendment would close or limit a major loophole that will allow large companies to avoid registering with the SEC (and therefore escape much regulation). The Reed Amendment would clarify how to define “shareholders” for the purpose of determining if a business is so widely owned that it must register with the SEC. Under the Amendment, the count should be based on beneficial owners of the shares, i.e., real people. The goal is to prevent evasion of the SEC registration threshold through “nominal” owners holding the shares for large numbers of beneficial owners. Big companies like H.R. 3606 – they will be regulated less and if the cost of capital rises for start-ups, that actually helps them. The Chamber of Commerce, the American Bankers’ Association, and the Independent Community Bankers of America have all weighed in heavily against the Reed Amendment – the idea of escaping SEC scrutiny greatly appeals to them.

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Guest Post: Anti-Investor Supreme Court Decision and the SEC

By Jeff McCord of The Investor Advocate

Impending SEC Recommendation on Anti-Investor Supreme Court Decision a Bellwether on Regulator’s View of “Public Interest”

In one of its filings prior to U.S. Judge Jed Rakoff’s celebrated November 28th refusal to rubber stamp an SEC-Citicorp deal allowing the bank – a “recidivist offender” — to escape significant damages and an admission of wrongdoing for what may have been egregious, knowing fraud in Citi’s sale of bad mortgage-related assets to unwitting investors, the SEC incredibly asserted that “the public interest . . . is not part of [the] applicable standard of judicial review [of the proposed Citicorp settlement.]” To that, Manhattan federal Judge Rakoff simply responded: “This is erroneous.” [see Rakoff ruling here ]

Just a few years’ ago, the idea that a federal judge would need to remind a federal regulatory agency that the judicial and executive branches work on behalf of the public interest would have seemed ludicrous. Now, it is long over-due.

An impending SEC recommendation to Congress (due in January) on whether an anti-US investor Supreme Court decision (Morrison, discussed below) should be overridden will help answer a timely question: has the Commission heard and understood Judge Rakoff’s admonition?

“Prosecuting Bus Boys and Nannies rather than Wall Street Bandits”

When it comes to the need to hold Wall Street fraud perpetrators accountable in the public interest, the Justice Department itself received a wake-up call from one long-time Member of the House Judiciary Committee, Zoe Lofgren (D-CA,16th District), who in May said prosecutors were more focused on immigration offenses than the on-going financial crisis:

The Department [of Justice] is spending its resources prosecuting nannies and bus boys who are trying to get back to their families. And, yet we have not brought any prosecutions of the bandits on Wall Street who brought the nation and the world to the brink of financial disaster. (Bloomberg)

Led by Lofgren, the California delegation of Democratic Members of Congress on October 10 called for Administration officials and the Federal Reserve to conduct an investigation into “systemic wrongdoing by financial institutions” in the mortgage markets.

Regulators Must Believe in Regulation to Prosecute White Collars, Professor Says

In a story on Judge Rakoff’s ruling, even the reliably establishment FORTUNE magazine opined:

For decades, financial wrongdoers have been able to skip public accountability, and slide out from under the consequences by paying out a sometimes substantial sum and moving on to the next deal.

Like Judge Rakoff’s obvious conclusion that the SEC should work on behalf of the public interest, University of California professor of criminology and law Henry N. Pontell made this “goes without saying” observation in a New York Times interview:

When regulators don’t believe in regulation and don’t get what’s going on, there can be no major white-collar crime prosecutions.

Denying US Investors’ Recourse When Foreign Stock Issuers Defraud Them

In what may be a bellwether on the SEC’s understanding of “what’s going on” in relation to its mission of protecting investors in the public interest, in January the Commission must recommend to Congress whether or not it should override one of the most notorious anti-US investor Supreme Court decisions to come out of a Court not known for acting in the interests of investors, consumers or the public. Specifically, the Dodd-Frank Act directs the SEC to review and make recommendations on Morrison v. National Australia Bank Ltd, a 2010 decision that denies U.S. investors the legal right to hold accountable any foreign listed company (such as Toyota, BP, Sony, DaimlerChrysler or Deutsche Bank) that defrauds them in a securities transaction — even if the wrongdoing takes place on U.S. soil. The decision has caused many meritorious investor lawsuits to be tossed from U.S. courts, denying Americans recourse.

Many pension funds, retirement plans, investor and public interest groups have written letters asking the SEC to recommend Congress override Morrison. Fourteen public pension funds managing more than $700 million in retirement funds for teachers, policemen, firemen, and other public servants in California, Colorado, Delaware, Florida, North Carolina, Maryland, Pennsylvania, Rhode Island and other states made a common sense argument:

[Morrison should be reversed because under that decision, foreign companies] can market their shares to American investors, can obtain a significant portion of their market capitalization from American investors, can file their financial statements with the [SEC], and can even engage in fraudulent conduct on U.S. soil, yet cannot be held liable under U.S. law to the victims of their fraud.

And, the pension funds (like Judge Rakoff and more than one professor) reminded the SEC that its mission as stated on its own website is “to protect investors and maintain fair and orderly markets.” The Exchange Act that established the SEC actually says protecting “the public interest and the interest of investors” are the objectives of the law.

Prudent Fund Management Practices “Turned Upside Down” by Supremes

For decades, to discharge their fiduciary responsibility, public pension funds have invested only in securities, including foreign stocks and bonds, protected under United States securities laws. And, prior to Morrison for more than twenty years, modern portfolio management practices dictated that pension funds reduce risk through investment diversity – both by country and industry.

For pension funds, investing in foreign based companies such as Toyota, Nokia, BP and others had been common and considered prudent,” explains Salvatore J. Graziano, a partner at the law firm of Bernstein Litowitz Berger and Grossman, LLP and president of the National Association of Shareholder and Consumer Attorneys. “Fund managers knew that if a foreign company they invested in committed fraud, corporate governance abuses, or other wrongdoing within the United States or harmed U.S. investors, they could hold such a company and its managers accountable and seek recovery of their investment losses in U.S. District Courts. These fund management practices and investor protections were turned upside down in 2010 by Morrison.

Watch SEC on Morrison

Has the Administration heard and absorbed the messages sent to it by Judge Rakoff, many of America’s largest pension funds, professors and millions of polled individuals that its’ Wall Street policies may have strayed from the public interest? In coming weeks, watch what the SEC recommends to Congress regarding Morrison.
# # #

Originally published at The Investor Advocate

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Senators Who Committed a Crime Demands Rule of Law

David Vitter (R-DiaperPuta) stands firm:

Sen. David Vitter (R., La.) will block two nominees to the Securities and Exchange Commission…

Daniel Gallagher Jr., a partner at the law firm Wilmer Cutler Pickering Hale & Dorr LLP who was nominated to join the SEC, and agency commissioner Luis Aguilar, who was nominated for a second term….both require Senate confirmation, haven’t encountered any substantive opposition partly because they were paired together as a Republican and a Democrat in order to reduce incentives for partisans to blow up their nominations.

But senators often use the confirmation process to pressure federal agencies to meet various demands. By placing a “hold” on the nominees, Mr. Vitter is delaying a confirmation vote by the Senate.

BarryO was strangely silent during Vitter’s re-election campaign, not once declaring that having committed an actual crime would be a reason to resign.

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