SEC shot down by US Supremes

Posted by kevin on February 28, 2013 under Foreclosure Blog | Comments are off for this article

One of the recurring themes in this blog (and others) has been the dismal record of US governmental agencies in trying to thwart lawlessness on the part of banks and individuals in the securities industry. Whether it was the sell out known as the $25B settlement, or the OCC’s abrupt curtailment of the foreclosure audits or the administration’s about face on Chapter 13 cramdowns, you get the impression that the consumer enforcement agencies are not there for the consumers.

In the latest debacle, the US Supreme Court voted 9-0 against the SEC effectively throwing out an enforcement action against two money managers at Gabelli Funds. The grounds- the SEC did not bring the action within the 5 year statute of limitations. The acts complained of happened between 1999 and 2002. The SEC claims it discovered the violations in 2003 but did not bring the penalty action until 2008. Given that the US Supremes are so divided, it is a real slap in the face of the SEC that they were shot down by a unanimous court.

On one hand, you could say that the SEC was thwarted in trying to protect the public. However, on the other hand, the question is why did it take the SEC 5 years from discovery to file its complaint. Clearly, it could not have been a high priority. Which gets us back to the initial question of whether the agencies are helping the consumer or playing ball with their future employers. Without strong restrictions on going from agencies like the SEC to Wall St, I do not think that you are going to root out this problem.