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The SEC Staff's Rubber Stamp

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The Wall Street Journal reported today that the Securities and Exchange Commission will not charge individuals as a result of J.P. Morgan's allegedly fraudulent sale of mortgage-backed securities. The Journal goes on to reveal that J.P. Morgan "will pay a significant financial penalty." The report is based on leaked details of a settlement between SEC staff and J.P. Morgan. The SEC has yet to vote on the deal.

This incident illustrates why the SEC ought to revive its short-lived practice of requiring staff to come to the Commission for guidance before undertaking settlement negotiations. Otherwise, as appears likely to happen in this case, the politically accountable commissioners will be voting on a fait accompli; the staff will present the settlement to them with every expectation that the Commission will simply rubber stamp it. At this point, it would be awkward for the Commission to turn down the staff-negotiated settlement or insist that individuals be charged. It is time for the Commission to reclaim its decision-making authority from the SEC's enforcement staff and insist that it is entitled to weigh in on settlements before the general public does.

1 Comment

Larry Williams former CEO of Orion Bank in Naples, Florida
was found guilty of similar charges leveled against Goldman Sachs
Bank of America, JP Morgan and Wells Fargo. Williams euchered investors out of $650 million and last August retired to Federal Prison where he will reside for 6 years. Good work SEC. The American public is really proud of your no-nonsense work.
JP Morgan, Goldman Sachs, Wells Fargo, Bank of America conned $100s of billions from investors and not a single executive was named or blamed. "Too Big To Fail" also means "We can do
anything we want with personal impunity because the SEC doesn't have the cajones to touch us." The New York Financial Mafia wins again.

Malcolm Berko

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Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.