SEC Securities and Exchange Comm

===

SEE SEC 2 T2 3 26 TRUMP

see shareholder revolts

rev door in that alums go into corps to aid with fraud? // reg capture?

see ESG

see crypto Gensler BIDEN GONE

we get hints about what corps do in filings? thus mod too?

===

3 26 maj rept

[### S.E.C.'s Enforcement Chief Abruptly Resigns

The New York Times

https://www.nytimes.com › U.S. › Politics](https://www.nytimes.com/2026/03/16/us/politics/sec-enforcement-chief-resigns.html)

Mar 16, 2026 — A senior Securities and Exchange Commission official abruptly resigned on Monday, raising questions about the agency's ability to root out ...Read more

nyt no lnx

S.E.C.’s Enforcement Chief Abruptly Resigns

Margaret A. Ryan is leaving the agency just six months after joining it, a surprise given that most people hold the position for years.

By Ben Protess

March 16, 2026

A senior Securities and Exchange Commission official abruptly resigned on Monday, raising questions about the agency’s ability to root out financial wrongdoing.

The official, Margaret A. Ryan, the S.E.C.’s enforcement chief, is leaving the agency just six months after joining it. Typically, S.E.C. enforcement chiefs serve for years.

The agency, created nearly a century ago at the height of the Great Depression to protect investors and oversee financial markets, did not provide a reason for Ms. Ryan’s sudden resignation. And Ms. Ryan, a former Marine and military judge, could not immediately be reached for comment.

In a statement provided by the S.E.C., Ms. Ryan thanked the agency’s chairman, Paul S. Atkins, and expressed confidence that “the foundation” they shaped together “will continue to serve investors and the markets well.”

Her departure — which comes as the S.E.C. undergoes a broader, business-friendly transformation in President Trump’s second term — could further embolden Mr. Atkins to rein in the agency’s enforcement division. Well before Ms. Ryan arrived, the agency had begun to retreat from a variety of Biden-era enforcement priorities, including cracking down on Wall Street and the cryptocurrency industry.

In December, The New York Times published an investigation into the S.E.C.’s backtracking from crypto cases, finding that the agency had eased up on more than 60 percent of the crypto lawsuits that were pending when Mr. Trump returned to the White House in January 2025. The agency paused some of its crypto cases, lessened penalties in others and outright dismissed several of the lawsuits.

The pullback, coinciding with a long-running government shutdown that stymied the agency, had prompted some key departures and depressed morale within pockets of the enforcement unit. Mr. Atkins, however, has contended that the agency needed to change, and that he was reining in the prior administration’s overzealous stance.

“Our goal has been to the lead the division of enforcement back to Congress’ original intent: enforcing the federal securities laws, particularly as they relate to fraud and manipulation,” Mr. Atkins said in the statement announcing Ms. Ryan’s departure. “I am pleased to report significant progress toward this objective,” he added, crediting Ms. Ryan, who he said “served with honor and distinction.”

Ms. Ryan, a former judge of the United States Court of Appeals for the Armed Forces, was a somewhat unconventional pick to run the S.E.C.’s enforcement unit, which is often led by seasoned white-collar litigators. Still, some former agency officials cheered the arrival of a law-and-order judge, predicting she would push Mr. Atkins to adopt a more aggressive stance.

In its statement, the agency said that it expected to announce Ms. Ryan’s successor in the coming weeks. In the meantime, Sam Waldon, a longtime agency official who was serving as a deputy enforcement chief, will be the acting director.

Ben Protess is an investigative reporter at The Times, covering President Trump.

See more on: Securities and Exchange Commission, Donald Trump

Share full article

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contxt

[### SEC's Riewe to step down

Private Funds CFO

https://www.privatefundscfo.com › secs-riewe-to-step-do...](https://www.privatefundscfo.com/secs-riewe-to-step-down/)

Jan 12, 2016 — Julie Riewe is leaving the US Securities and Exchange Commission (SEC) Division of Enforcement's Asset Management Unit in February, after 10 ...Read more

Missing: fired ‎| Show results with: fired

[### SEC's top enforcement chief quit after clashing with agency ...

Facebook · Really American

2.7K+ reactions · 1 day ago](https://www.facebook.com/reallyamerican/posts/breaking-secs-top-enforcement-chief-quit-after-clashing-with-agency-leadership-o/1418547470313719/)

Margaret Ryan, who led the SEC's Division of Enforcement, submitted her resignation after just over six months in the role. ... Julie Beebs.Read more

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an 12 25

Two of President Donald Trump's donors have been able to exert immense influence over the U.S. government's chief financial regulator — largely due to their closeness with the president and his family.

That's according to a Monday article in the New York Times, which reported that Cameron and Tyler Winklevoss (also known as the Winklevoss Twins) have managed to singlehandedly shift how the U.S. Securities and Exchange Commission (SEC) approaches the cryptocurrency industry. The Times reported that the Winklevosses, whose combined net worth is in excess of $9 billion, have not only turned an SEC investigation with potential for a criminal referral from the Department of Justice into a settlement, but have effectively stopped the SEC from opening any new cases into crypto firms since Trump's second presidency began.

Crypto firms were routinely investigated by former President Joe Biden's SEC, with the Times reporting that Trump's predecessor averaged two crypto investigations per month while Trump's SEC averaged one new investigation each month in his first term. Some of those firms, like Binance and Coinbase, were referred to the DOJ for criminal indictments. However, the SEC has yet to open a single investigation into any cryptocurrency companies in 2025, per the Times' reporting.

When Trump came into office, the Winklevosses were being investigated by the SEC after their firm, Gemini Trust, saw its crypto program collapse, affecting 230,000 investors. According to the Times, Gemini collaborated with another firm, Genesis Global Capital, that went bankrupt after making bad loans with roughly $2 billion worth of investors' assets. Investors only managed to recover their money after an 18-month fight.

A suit filed by plaintiffs in New York was settled, though the SEC was still litigating the Gemini as of Trump's second inauguration. As of September, the SEC announced it had resolved the Gemini case, meaning a settlement announcement is likely pending. When Tyler Winklevoss endorsed Trump in June of last year, he did so while also bashing the Biden administration's regulatory approach to crypto.

"President Donald J. Trump is the pro-Bitcoin, pro-crypto, and pro-business choice. This is not even remotely open for debate. Anyone who tells you otherwise is severely misinformed, delusional or not telling the truth," Tyler Winklevoss posted to X. "It’s time to take our country back. It’s time for the crypto army to send a message to Washington. That attacking us is political suicide."

The SEC's new kid-gloves approach to crypto comes at a time when Trump has drastically increased his net worth since taking the oath of office for the second time, largely due to crypto. Forbes reported in June that $3.3 billion of the president's estimated $5.5 billion in net worth is held in cryptocurrency. His eldest adult sons, Don Jr. and Eric, are also crypto investors. The Winklevosses have funded the firm American Bitcoin, which Eric Trump co-founded and where Donald Trump Jr. is a key investor.

Click here to read the Times' full report (subscription required).

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9 25 ggl

AI Overview

Since his inauguration in January 2025, President Donald Trump has appointed a new chairman and an acting chairman to lead the Securities and Exchange Commission (SEC), bringing a marked shift toward a deregulatory, pro-business agenda

Current and former SEC leaders

Paul S. Atkins, Chairman

Current Chairman: Paul S. Atkins was sworn in on April 21, 2025, after being nominated by Trump and confirmed by the Senate.
Background: Atkins previously served as an SEC commissioner from 2002 to 2008 and is known for his advocacy of lower regulatory burdens and clear rules, particularly for the cryptocurrency and digital assets industry.

Mark T. Uyeda, Acting Chairman

Former Acting Chairman: Prior to Atkins's confirmation, Mark T. Uyeda served as Acting SEC Chair from January 20, 2025, to April 21, 2025.
Impact: During his brief tenure, Uyeda initiated changes that began reversing Biden-era regulatory actions and signaled a new direction for the agency.

Gary Gensler, Former Chairman

Predecessor: Gary Gensler, a Biden appointee, served as SEC Chair from April 2021 to January 2025. He was known for his aggressive enforcement and rulemaking agenda.

Policy shifts under the new administration

Under Trump's appointments, the SEC is shifting its priorities toward market innovation and away from the extensive enforcement and regulation seen during the previous administration. Key policy shifts include:

Crypto regulation: The SEC, now led by Atkins (a supporter of cryptocurrencies), is moving away from an "enforcement-first" approach and prioritizing the establishment of a clearer regulatory framework for the digital asset space.
Enforcement: Enforcement is expected to refocus on more traditional areas, such as protecting retail investors from fraud, rather than testing the agency's authority on newer issues.
Regulatory rollback: The agency has already taken steps to rescind or amend some rules introduced during the Biden administration, including climate disclosure rules.
Shareholder proposals: The SEC has made it easier for companies to exclude certain environmental and social shareholder proposals from proxy statements.

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pop info judd ymail 12 24

chinese Crypto entrepreneur Justin Sun paid $6.2 million for a banana — sold by Sotheby's as conceptual art — and then ate it last Friday.

The banana is not Sun's most notable recent purchase.

On November 25, Sun purchased $30 million in crypto tokens from World Liberty Financial, a new crypto venture backed by President-elect Donald Trump. Sun said his company, TRON, was committed to "making America great again."

[twt]

World Liberty Financial planned to sell $300 million worth of crypto tokens, known as WLF, which would value the new company at $1.5 billion. But, before Sun's $30 million purchase, it appeared to be a bust, with only $22 million in tokens sold. Sun now owns more than 55% of purchased tokens.

Sun's decision to buy $30 million in WLF tokens has direct and immediate financial benefits for Trump. A filing by the company in October revealed that "$30 million of initial net protocol revenues" will be "held in a reserve… to cover operating expenses, indemnities, and obligations." After the reserve is met, a company owned by Donald Trump, DT Marks DEFI LLC, will receive "75% of the net protocol revenues."

So before Sun's purchase, Trump was entitled to nothing because the reserve had not been met. But Sun's purchase covered the entire reserve, so now Trump is entitled to 75% of the revenues from all other tokens purchased. As of December 1, there have been $24 million WLF tokens sold, netting Trump $18 million.

Sun is also joining World Liberty Financial as an advisor, making Sun and the incoming president business partners.

While Trump has the cash, Sun's tokens are effectively worthless. To comply with U.S. securities law, WLF tokens are "non-transferable and locked indefinitely in a wallet or smart contract until such time, if ever, [WLF tokens] are unlocked through protocol governance procedures in a fashion that does not contravene applicable law." The only thing that Sun can do with his tokens is participate in the "governance" of World Liberty Financial. Right now, the only thing World Liberty Financial does is sell tokens.

Any foreign national paying an incoming president $18 million weeks before entering the White House should raise red flags. Sun's purchase is even more alarming because the Securities and Exchange Commission (SEC) is currently prosecuting him for fraud.

The SEC's ongoing prosecution of Sun

On March 22, 2023, the SEC charged Sun and three companies he owns. The SEC accused Sun of marketing unregistered securities and "fraudulently manipulating the secondary market" for a crypto token "through extensive wash trading." Wash trading involves "the simultaneous or near-simultaneous purchase and sale of a security to make it appear actively traded without an actual change in beneficial ownership." In other words, according to the SEC, Sun made it seem like there was a lot of interest in crypto tokens he issued when much of the trading was fraudulent and manufactured by Sun.

The SEC also charged Sun with "orchestrating a scheme to pay celebrities to tout" his crypto tokens "without disclosing their compensation." Federal law requires people who endorse securities to "disclose whether they received compensation for the promotion, and to specify the amount." The celebrities involved included Lindsay Lohan, jake Paul, and Soulja Boy.

[twt]

Lohan paid $40,000, and Paul paid about $100,000 to settle the charges against them without admitting liability. Soulja Boy did not respond to the lawsuit, and a default judgment was issued against him.

Sun posted on X that he believes the SEC "complaint lacks merit" and complained that "the SEC's regulatory framework for digital assets is still in its infancy and is in need of further development."

The litigation against Sun is ongoing, with a federal judge considering a motion by Sun's attorneys to dismiss the charges. The current SEC Chairman, Gary Gensler, who announced the charges against Sun, will step down when Trump takes office in January. A new SEC commissioner appointed by Trump could settle or dismiss the charges against Sun.

How Trump can use the power of the presidency to unlock hundreds of millions in profits for himself

Through World Liberty Financial, Trump can reap massive personal profits from creating a more permissive regulatory environment for crypto ventures.

In addition to his 75% share of revenues over $30 million, Trump's company was also awarded 22.5 billion WLF tokens. At the current sale price, these tokens are worth more than $300 million. That is more than 20 billion tokens being offered for sale publicly. (This makes the "governance" value of WLF tokens, which was already questionable, effectively worthless. No matter how many tokens you own, Trump will always be able to outvote other token holders.)

Right now, Trump's tokens — like those purchased by Sun — are worthless because they cannot be transferred. But Trump could appoint a new SEC chairman who is friendly to the crypto industry and who would create new rules allowing the WLF tokens and similar crypto assets to be legally traded. If the price of the tokens increases when they hit the open market, which is a possibility for a crypto token backed by the President of the United States, the value of Trump's tokens could be in the billions.

That appears to be exactly the path Trump is taking. WIRED reports that Trump is "asking the crypto industry to weigh in on potential picks." Among the leading contenders is Paul Atkins, a former SEC Commissioner, who, since leaving the agency in 2008, has run a consulting firm that works with crypto companies. Atkins is also co-chair of the Token Alliance, an initiative of the Chamber of Digital Commerce, the lobbying group for the crypto industry. He is also a member of the Chamber of Digital Commerce's Board of Directors.

Another top contender, former SEC General Counsel Robert Stebbins, has said that the SEC should "pause most of its crypto lawsuits while clearing a path for the firms to do business without the overhang of litigation." But Stebbins' candidacy underscores the need for Sun to forge a favorable relationship with Trump. Stebbins acknowledged that, even if it takes a more permissive view toward the crypto industry, it may want to consider continuing to pursue litigation involving fraud.

Major media outlets obsessed with banana, ignore Sun's payment to Trump

A foreign national under federal fraud prosecution making a purchase that results in $18 million cash payment to the president-elect has all the makings of a major scandal. But it has been virtually ignored by several major media outlets.

The New York Times, for example, has published five articles about Sun's purchase of the banana but none about Sun's $30 million purchase of WLF tokens and his business partnership with Trump. The Washington Post has published three articles about the banana, but its coverage of Sun's purchase of WLF tokens was limited to one short paragraph in a larger editorial about the crypto industry. (The paragraph does not explain how Trump personally profits from Sun's token purchase.) The Wall Street Journal did publish a short piece about Sun's token purchase on its "Live Update" blog, but the piece was not viewed as significant enough to be included in the print edition. The paper published two articles, plus a video, focused on the banana. One of the Wall Street Journal articles about the banana was published on the front page of the paper.

context

intercept

after two elections where he bucked Ohio’s rightward trend, Democratic Sen. Sherrod Brown is clinging to thenarrowest of polling leads. If he loses to unpopular car salesman Bernie Moreno next month, he might have crypto to blame.

Cryptocurrency companies are pouring tens of millions of dollars into the race through a super PAC in response to Brown’s scathing criticism of the industry as Senate Banking Committee chair.

Their leading role in the race shows how much money — no matter the “coin” — talks.

Crypto sat in the political doghouse after the collapse of Sam Bankman-Fried’s FTX fraud two years ago, but it drew broad bipartisan support for its top legislative priority this May as it showered money on congressional races.

“Really their only avenue here to continue their scams is to get enough politicians to change the law.”

If crypto can take down Brown next month, critics warn, it could lead to more success for an agenda that includes neutering the Securities and Exchange Commission and opening the door for more traditional banks to hold crypto.

“They’re losing in the courts, they’re losing in the court of public opinion, so really their only avenue here to continue their scams is to get enough politicians to change the law,” said Dennis Kelleher, the CEO of financial reform nonprofit Better Markets. “The key to that is taking out anybody who opposes them.”

Mad Money

Operating through a cluster of blandly named super PACs, the crypto industry had made nearly half of all corporate donations in this year’s elections as of August. A single pro-crypto super PAC, Fairshake, has raised more than $200 million and spent more than $132 million this cycle.

Fairshake and its affiliates have spent millions backing Democratic Senate candidates Reps. Ruben Gallego in Arizona and Elissa Slotkin in Michigan, along with House candidates on both sides of the aisle.

Nowhere has crypto’s influence been more obvious than Ohio. In the last election cycle, a super PAC bankrolled by Bankman-Fried backed now-Rep. Shontel Brown, D-Ohio, over progressive Nina Turner.

This year, crypto is coming even harder into the state. A Fairshake affiliate, Defend American Jobs, has spent more than $38 million on ads boosting Moreno and blasting Brown, according to a recent Washington Postanalysis.

A Fairshake spokesperson did not return a request for comment, but the reasons for the attack ads are clear enough. Well before Bankman-Fried’s downfall, Brown was a vocal critic of cryptocurrency.

“Stablecoins and crypto markets aren’t actually an alternative to our banking system,” he said in December 2021. “They’re a mirror of the same broken system –– with even less accountability, and no rules at all.”

The super PAC’s spending on a race that could hand control of the Senate to the GOP has made some Democratic industry leaders uncomfortable. A spokesperson for one of the PAC’s top donors, the crypto exchange Coinbase, said the PAC’s spending decisions are made independently, a claim echoed by Andreessen Horowitz, a venture capital firm that hasinvested billions in the crypto industry.

Coinbase CEO Brian Armstrong said in a blog post that the company was making its donations in an effort to get “regulatory clarity.”

In June, Armstrong said, “Crypto voters won’t be taken seriously until we send a clear message to political candidates that it is bad politics to be anti-crypto.”

Taming the SEC

Yet it isn’t just “clarity” that Armstrong and other industry players want. They also want specific legislation. “Getting the wrong kind of regulation is worse than none at all,” Armstrong said last month.

Top of the list is legislation called the Financial Innovation and Technology for the 21st Century Act, or FIT 21, which would reclassify many kinds of crypto as commodities rather than securities.

The obscure-sounding shift has broad implications. Observers generally consider the rules for commodities — items like corn and wheat — to be looser than those for securities such as stocks and bonds.

“The CFTC was set up to regulate corn futures.”

Just as importantly, crypto critics say, would be a corresponding shift in oversight. Under the congressional legislation, crypto would shed the SEC for the Commodity Futures Trading Commission, a body with less resources and a leaner regulatory staff.

“The CFTC was set up to regulate corn futures,” said Mark Hays, a senior policy analyst with Americans for Financial Reform and Demand Progress. “The people they’re looking at are sophisticated hedge funds or ag traders, they are not set up to protect your cousin or your grandma logging onto their phone.”

SEC Chair Gary Gensler, who has emerged as a crypto industry foil, warned of the bill’s consequences in a statement after it passed the House with bipartisan support in May. Scammers could label themselves crypto companies in order to evade government oversight, he said.

Gensler said, “The crypto industry’s record of failures, frauds, and bankruptcies is not because we don’t have rules or because the rules are unclear. It’s because many players in the crypto industry don’t play by the rules.”

Opening Up the Banks

So far, the crypto industry’s favorite piece of legislation has not advanced in the Senate, although Majority Leader Chuck Schumer, D-N.Y., recently made supportive-sounding comments.

Gensler also warned of the potential for larger contamination of the U.S. capital market. The issue arose in 2022, when SEC staffers tried to curb the danger with guidance advising financial institutions like banks to treat crypto as a liability rather than an asset on their balance sheets.

The SEC’s thinking was that crypto is too vulnerable to theft, fraud, or lost wallet keys, but the crypto industry and bankers cried foul.

Tech Billionaires Love Trump Now — Because He’s One of Them

https://theintercept.com/2024/08/07/silicon-valley-tech-billionaires-president-trump/

Stand With Crypto, an industry advocacy group, said the guidance “disincentivizes banks from offering digital asset custody at scale and limits banks’ ability to develop safe, innovative use cases for blockchain technology.”

While the guidance was nonbinding, for banks that decided to follow through, it meant that holding crypto for customers would require them to increase other holdings.

Congress passed legislation overriding the guidance, only to be vetoed by President Joe Biden in June. For now, the guidance remains in place. Yet the crypto industry still harbors its larger ambition of making it easier for traditional financial institutions to hold crypto.

Hays, the Americans for Financial Reform policy analyst, said, “They also want some of the other non-bank actors that provide crypto custody to be in the green.”

“Stable” Coins

Sometimes lost in the fallout from the Bankman-Fried saga is the story of an earlier crash involving a so-called stablecoin, TerraUSD, which was supposed to maintain a one-to-one peg with the dollar.

In short, it didn’t. Investors who thought they were getting into crypto in the safest way possible had their savings wiped out.

“A stablecoin is really nothing more than a crypto money market fund, with all the risks and dangers of a money market fund.”

TerraUSD was an “algorithmic” stablecoin, meaning that it was not backed by actual assets. One of the industry’s best hopes in Congress is to get legislation passed authorizing stablecoins that are backed by concrete assets.

Rep. Maxine Waters, D-Calif., the ranking member of the House Financial Services Committee and a frequent crypto skeptic, floated the idea last month of reaching a “grand bargain” with Republicans during the lame-duck Congress after the election.

Although stablecoins seem to have more legislative legs than other crypto proposals, skeptics like Kelleher, of Better Markets, are wary. He likened them to money market funds, which had to be saved from collapse by the Federal Reserve in 2008 and 2020.

“A stablecoin is really nothing more than a crypto money market fund, with all the risks and dangers of a money market fund,” he said. “Except it has even more, because it’s a crypto product that is not only unregulated, but because it’s also untransparent.”

Editor’s Note: In September 2022, The Intercept received $500,000 from Sam Bankman-Fried’s foundation, Building a Stronger Future, as part of a $4 million grant to fund our pandemic prevention and biosafety coverage. That grant has been suspended. In keeping with our general practice, The Intercept disclosed the funding in subsequent reporting on Bankman-Fried’s political activities.*

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===

thom 3

an 9 24 no lnx

this week may well see a court decide the fate and future of Fox “News” and thus the Republican Party, at least in its current hard-right neofascist form. And odds are Fox viewers are blissfully ignorant about the pitched battle that just played out in a Reno courtroom over the future of their beloved propaganda outlet.

Sir Keith Murdoch was the notoriously racist and misogynist owner of a small newspaper chain in Australia. It was inherited by his son, Rupert, who — using sensationalism and bigotry — turned it into a multi-billion-dollar enterprise that spans three continents.

Former Australian Prime Minister Kevin Rudd called Rupert Murdoch “the greatest cancer on the Australian democracy” in the pages of The Sydney Morning Herald, the New York Times of Australia. Noting that Murdoch owns about “two thirds of the country’s print media,” Rudd wrote:

“In Britain, Murdoch made Brexit possible because of the position taken by his papers. In the United States, Murdoch's Fox News is the political echo chamber of the far right, which enabled the Tea Party and then the Trump party to stage a hostile takeover of the Republican Party. In Australia, as in America, Murdoch has campaigned for decades in support of tax cuts for the wealthy, killing action on climate change and destroying anything approximating multiculturalism.”

When Rupert was divorcing his second wife he put most of the family’s businesses into a trust, apparently to prevent her from grabbing a larger share of his wealth. The terms of that trust stipulate that when Rupert dies, his four children — Lachlan, James, Elisabeth, and Prudence — would share equal votes and power over the business dynasty their father had inherited from his father.

But now Rupert — who’s 93 years old — is having second thoughts, because James, Elisabeth, and Prudence are apparently not all that enthusiastic about Fox “News” and other Murdoch media outlets nakedly lying to and whipping up hatred among their viewers and readers, both here, in Australia, and in the UK. Only Lachlan, Rupert’s oldest son, is loyal to his father’s vision of peddling-hate-for-billions-in-profits.

So, Rupert went to court in Reno — the proceedings are sealed, but the case began last week and wrapped up yesterday (although we don’t yet know the result) — to try to break the trust and hand exclusive or primary control of his fiefdom to Lachlan.

Fox “News” viewers have no idea that they’re being constantly lied to, both by commission (like telling them the 2020 election was stolen by voting machines) and by omission. They think they’re seeing the world “as it is” and getting fair and balanced “truth” and “straight talk,” which is why Fox “News” is so potent.

Without Fox “News” there probably never would have been a January 6th coup attempt, and, given how thin their margins were, likely no 2000 Bush or 2016 Trump presidencies.

The stakes here are enormous. Some media observers believe that a major role in Barack Obama’s 2008 victory was Air America broadcasting my program and others to well over two-thirds of America with big stations in 62 major markets. (That ended when Mitt Romney decided to run for president and had his company buy Clear Channel, then flip all of the stations Air America was leasing from them from progressive talk to sports, killing the network in 2010.)

Similarly, the rise of Fox following Reagan fast-tracking Murdoch’s US citizenship has played a huge role in Republican victories across the nation and the solid hold the GOP has on red state America, where Fox and rightwing hate radio predominate.

Activist investors in the Fox media caliphate have tried to force a vote at the upcoming shareholders’ meeting that would require Fox “News” to label their opinion programming — which constitutes most of their programming — as “opinion.” An attorney for the activist shareholder group, Luke Morgan, told US News & World Report:

“There can hardly be a more significant issue for Fox than its misinformation problem. This is precisely the sort of issue that is appropriate for shareholder input.”

Nonetheless, to Murdoch’s great delight, no doubt, the Securities and Exchange Commission (SEC) ruled last week that Fox doesn’t have to start informing its viewers when their talent crosses the line from reporting to indoctrinating.

Weirdly, this drama within an Australian family may well determine the fate and future of the Republican Party and the conservative and MAGA movements in the US. The future of democracy in America.

It’s a real-life Succession drama and may take months to resolve.

Keep an eye on this story. While it’s probably the most under-reported major news story in America right now, the outcome will have far-reaching consequences for all of us.

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an 5 24

created in 1934 during the Great Depression, the Securities and Exchange Commission (SEC) was among the many achievements of President Franklin Delano Roosevelt's New Deal. The SEC has been a prime target of the right-wing legal movement, and the SEC's regulatory powers are being challenged in the U.S. Supreme Court case SEC v. Jarkesy.

But Politico reporters Declan Harty, Josh Sisco and Josh Gerstein, in an article published on May 22, stress that the case has implications that go way beyond the SEC and could, depending on what the High Court ultimately rules, affect other federal regulatory agencies as well.

"A decade-long conservative crusade against financial regulators will come to a head soon with a crucial Supreme Court ruling, part of a legal strategy that has spread across multiple Washington agencies into a broad attack on a core power of the federal government," the journalists explain. "The Court's ruling on Securities and Exchange Commission v. Jarkesy, a case challenging the power of in-house federal judges, could hobble a whole range of agencies in unpredictable ways, cutting the powers of antitrust enforcers, labor regulators and consumer finance watchdogs."

The "legal campaign" surrounding SEC v. Jarkesy, according to Harty, Sisco and Gerstein, is being "driven by an alliance of tech billionaires, conservative legal activists and the business lobby."

"Jarkesy itself is a challenge to the legal legitimacy of the SEC's internal system of judges and courts, which hear cases and impose fines," the reporters note. "Such internal courts are key to enforcement at many federal agencies."

Todd Phillips of the liberal Roosevelt Institute told Politico that the SEC's critics in Jarkesy are "really just trying to get the Supreme Court to tear down the regulatory system that's been in place since before the New Deal."

Harty, Sisco and Gerstein note, "The Jarkesy case itself revolves around a hedge-fund manager, George Jarkesy, also a conservative TV and radio commentator, who was fined for defrauding investors and then sued over the validity of the tribunal that did it. Supporters of the process say there's a good reason to empower such internal courts, especially in complex issues like securities fraud and labor relations."

*Read Politico's full report at this link.

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heated mail 3 24

One of the biggest challenges in holding corporations responsible for the climate crisis is that we have no idea how much they’re polluting. And corporate America is fighting tooth and nail to keep it that way.

Sure, there are corporations that try to earn green points by voluntarily disclosing their greenhouse gas emissions—ExxonMobil is one, Walmart is another. But currently, under federal law, there is no rule requiring companies to accurately calculate or divulge their full impact on the planet. Nor is there a rule saying that companies have to report how the climate crisis is impacting their business, and hurting their bottom line.

All that was set to change when the most powerful financial regulatory body in the country decided that the climate crisis was a “significant risk” too big to ignore. In 2022, the U.S. Securities and Exchange Commission (SEC) proposed a climate disclosure rule that would have forced public companies to report their greenhouse gas emissions—from their direct emissions (also known as Scope 1 emissions), to emissions from their energy use (Scope 2), to emissions from their supply chain (Scope 3). It also would have required that companies report how climate change is impacting their bottom line.

But that’s not what happened. Instead, on Wednesday, the five-person SEC voted to adopt aclimate disclosure rule that was significantly watered down. It is no longer mandatory for companies to report their emissions; instead it says that companies should disclose their greenhouse gas emissions if they consider them “material”—in other words, of significant importance to their investors. It made no mention of Scope 3 emissions, which are the largest portion of any company’s pollution (For example, 80 percent of Exxon’s emissions are Scope 3).

The changes are the result of a two-year pressure campaign by corporations, anti-climate conservative foundations, anti-ESG lawmakers, and the agriculture lobby. These well-funded groups met with the SEC, wrote letters, and submitted some of the 24,000 comments on the climate rule—the most comments the SEC has ever gotten.

HEATED is a reader-supported publication. To receive new posts and support our work, consider becoming a free or paid subscriber.

If you’re not familiar with the SEC, here’s how powerful it is: the SEC effectively put Martha Stewart in jail for insider trading, bankrupted Enron for fraud, and found cryptocurrency FTX founder Sam Bankman-Fried guilty of fraud. The SEC is not afraid of corporate America. So why did it cave to interest groups here?

The answer lies in the conservative Trump-appointed judges all over the country— many of whom are Trump-appointed—striking down federal climate regulations. According to Clara Vondrich, senior policy counselor at consumer advocacy nonprofit Public Citizen, the world’s most polluting industries and GOP lawmakers threatened to sue if the SEC required them to report all their emissions. Those were not empty threats—within hours of the final rule being adopted, 10 Republican-led states had sued the SEC for overreach.

This chilling effect by “a radical judiciary is not the way democracy is supposed to work,” Vondrich told me in an interview on Tuesday. We spoke about the myriad forces holding back corporate climate accountability—and talked about an “astounding” conversation she had with the SEC chairman last week.

When asked what she thought of the SEC’s changes, Vondrich said, “You know how a human has a beating heart? Without the beating heart, the person dies. It's a very stark metaphor, but essentially that's what the SEC has done.”

Arielle Samuelson: You talked to SEC Chair Gary Gensler on the phone last Friday. What did he tell you?

Clara Vondrich: Well, he told us a very interesting anecdote about pinball, which really left me astounded. ...

===

june 2022

https://www.vox.com/23058987/sec-climate-finance-disclosure

as drought spreads and sea levels rise, the economic impacts of climate change will run in the trillions of dollars. The insurance firm Swiss Re projects climate disasters would cost the world as much as $23 trillion by 2050, bigger than the impact from the pandemic and the Great Recession of 2009 combined.

It’s reasonable business planning to account for all this foreseeable risk — just like planning for cyberattacks or business disruptions from a pandemic. Last year, for instance, the US had to spend $145 billion dealing with floods, fires, and other climate-related disasters.

Yet somehow, climate change has fallen through the cracks of US financial regulation. Publicly traded companies are required to disclose information about “material” risks that affect their company regardless of their cause, from sanctions to supply chain chaos. But there are no uniform standards for disclosing how much fossil fuel pollution they generate or the impact that climate change could have on their future growth. Instead, companies have been left free to inflate their environmental progress, all with little scrutiny from the public.

This kind of information is, in theory, essential to a functioning free market, so investors can make decisions based on complete information. But fossil fuel interests, conservative ideologues, and corporate trade groups are striving to keep shareholders in the dark on climate risks.

The Biden administration is trying to make companies more publicly accountable for the risk of the climate crisis. A linchpin of Biden’s plan is a draft rule the Securities and Exchange Commission (SEC) proposed in March. Over 500 pages, the SEC rule proposes that publicly traded companies disclose how climate change affects their business outlook and identify a board member or board committee to focus on climate-related risks.

Once the rule is finalized, companies will have to disclose how their operations are affected by extreme weather events and the impact of climate change on the short- and medium-term business outlook. They’ll also have to report the emissions both from their company’s operations and from how their products are used. This is particularly bad news for fossil fuel companies with business models predicated on selling pollution. Until this rule, they haven’t had to fully account for the environmental impact from things like selling gas that’s burned by consumers’ cars.

This is a rule, in other words, that helps the free market act like the free market, giving investors exactly the information they need to make the decisions,” Emory University business law expert George Georgiev said.

As the draft rule’s comment period came to a close, it’s clear any regulation on climate change faces serious headwinds. The loudest protests have come from right-wing groups and corporate-aligned nonprofits that have flooded the public comments with previews of the argument they’ll take to courts.

Plenty of businesses in the financial sector stand to benefit from this rule, like the investing giant BlackRock, which has pledged to align its assets with climate goals. But some could be hurt. The companies that benefit from greenwashing their climate commitments are doing everything they can to protect the chaotic status quo.

Financial transparency on climate change is hardly a radical idea

The SEC has required and standardized public company disclosures since 1933. In recent decades, the SEC has issued nonbinding guidance on how publicly traded companies should consider Covid-19 disruptions, Russia’s invasion of Ukraine, and even a feared “Y2K” meltdown at the turn of the 21st century, so the companies would meet their fiduciary duty.

But the SEC has been painfully slow on climate change. Right now, businesses disclose the risks and costs of their business on the climate on a voluntary, patchy basis with no clear standardization.

A 2020 Government Accountability Office surveyed 32 midsize and large publicly traded companies and found little consistency. Airlines, for example, used years anywhere between 1990 and 2017 as the baseline for calculating their climate footprint. Water companies have used completely different measurements for reporting water extraction. Some companies would just report carbon emissions, while others would report total greenhouse gas emissions (including sources like methane).

The proposed SEC rule cites other evidence of companies not paying attention to this risk, like an internal survey of climate-related keywords in companies’ 10-Ks between June 2019 and December 2020. They found only 31 percent mentioned climate change at all.

This information is not just to benefit climate change efforts; it is also useful to investors. It makes clearer, for instance, that a retail company’s warehouses might be threatened by increased flooding, that an airline company might have to ground more flights because of rising heat waves, or that a bank’s backing of major fossil fuel expansion has the strong chance of backfiring in a world that transitions to renewables. Without any regulation and standardization, companies will just continue to try to outshine one another on their environmental and social commitments without hard data to back it. This mismatch will become an existential risk to financial instability if, for example, extreme weather pummels a business that did not prepare accordingly.

Environmental activists have pushed for more from companies by proposing shareholder resolutions at annual meetings that ask for more transparency, but have met with mixed success in shareholder votes that don’t bind the company to taking action.

In this regulatory vacuum, voluntary global affiliations have cropped up, including the Net Zero Assets Managers Initiative, representing some $43 trillion in assets, and Climate Action 100+, representing more than $60 trillion. Another of these groups is run out of the Financial Stability Board as a Task Force on Climate-related Financial Disclosures (TCFD), a voluntary system that has grown to more than 3,000 companies. The task force’s recommendations tell companies to consider the short-, medium-, and long-term climate impacts, emissions that result from investment decisions, and their operations’ pollution, and account for the changing climate’s consequences for the business. The hundreds of companies that voluntarily comply with these standards aren’t necessarily green or good for the environment, but it’s an extra gold star for their sustainability transparency.

Eight countries, including the UK, have passed laws that will mirror the TFCD’s recommendations, but the US would remain an outlier without the SEC rule. “Investors put their money where they think there’s a good opportunity and good information,” said Steven Rothstein, managing director of the Ceres Accelerator for Sustainable Capital Markets. “If we don’t have good information, we run the risk of falling behind internationally.”

The SEC’s rule is basically the US playing catch-up, based on standards the mainstream corporate community aligned with TFCD have already backed.

Initially, companies will have to spend extra to comply with the rule — up to $530,000 a year for larger companies by the SEC’s estimate, but it will vary depending on how much companies are doing already on climate disclosure. Typically, the costs of rules shrink over time. Otherwise, the rule itself is quite modest. The SEC is “not saying you should or shouldn’t invest in climate products,” Rothstein said. “They’re just saying, tell investors what you’re doing and do it in a consistent way.”

Environmentalists and some Democratic lawmakers argue the SEC could be doing even more. The SEC does not change how companies disclose climate-related activities like PR campaigns and political influence, the kind of activities that tend to be outsourced to nonprofits that shield their activities from the public. In March, Sen. Sheldon Whitehouse (D-RI) called it a “failure of nerve that shies away from a perfectly legal, necessary response to the climate danger we face” because political efforts remain “the single most material disclosures a company could make to achieve climate safety.”

Right-wing groups claim financial transparency is an attack on free speech

Unsurprisingly, the SEC is facing immense pressure to withdraw this rule because of the same shadowy political spending that companies don’t have to disclose in the first place. Groups like the US Chamber of Commerce, the National Association of Manufacturers, Americans for Prosperity, and the Competitive Enterprise Institute have flooded the SEC with comments that argue company free speech would be violated.

Trade groups and right-wing think tanks have argued that requiring companies to report these emissions is akin to violating their First Amendment rights of free speech, pointing to a court case that ruled a regulation requiring the disclosure of conflict-zone minerals would amount to :{“}::{compelled speech”}: and violated the companies’ rights.

The American Petroleum Institute, the oil industry lobby, has argued the rule “could raise serious First Amendment issues under recent applying strict scrutiny to content-based laws compelling speech.”

The argument has found purchase with conservative lawmakers, like West Virginia Attorney General Patrick Morrisey,who picked up the argument in his 2021 letter to Treasury last year. In Congress, 19 Republican senators argued in their submitted comments that the rule is “not within the SEC’s mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.” Another 40 Republican representatives wrote that the rule will act to “undermine and shame public companies,” while Republican attorneys general describes the rule as a “total reordering of [the SEC’s] present disclosure regime.”

The attack on regulation under the guise of First Amendment rights has become more familiar in recent years. “Unfortunately, the Supreme Court has been steadily giving corporations more and more leeway, more and more rights,” said Ciara Torres-Spelliscy, a corporate law expert who has published several books on corporate speech.

The court also opened the door to more of these lawsuits, striking down a California law that required nonprofits to disclose their donors, siding with the Americans for Prosperity Foundation’s argument against disclosing their donors and providing IRS 990 forms to the state. Other legal challenges to campaign finance laws and unions have used the First Amendment.

Legal experts supportive of the SEC rule consider the argument a long shot in courts. “I think that argument is really far-fetched,” Emory’s Georgiev said.

But it’s still worrisome. If it succeeds, whether in courts or as a scare tactic to get the SEC to backtrack, it sets a dangerous precedent for the financial system at large. “If this climate rule is violating the First Amendment, it’s been all nine decades [the SEC has been] violating the First Amendment,” Georgiev said. “They will definitely try it out in courts. At the end of the day, a lot of far-fetched arguments succeed in courts.”

===

ref

https://www.investmentnews.com/w-va-attorney-general-threatens-to-sue-sec-over-enhanced-esg-disclosures-204490

no lnx

State attorney general threatens to sue SEC over ESG disclosures

attorney general

State and federal GOP officials continue to push back against what they call regulatory overreach. The SEC says it is trying to meet investor demand for ESG information.

March 26, 2021

By Mark Schoeff Jr.

West Virginia Attorney General Patrick Morrisey has threatened to sue the Securities and Exchange Commission if it doesn’t back off its effort to expand environmental, social and governance disclosures.

Morrisey said that mandating ESG disclosures from companies that are not related to their financial performance would represent regulatory overreach and would be unconstitutional because it would not “withstand strict scrutiny” under free speech rights.

In a letter Thursday to SEC Acting Chair Allison Herren Lee, Morrisey criticized a recent speech in which Lee said the SEC is considering expanding climate risk and ESG disclosures to meet investor demand.

“There is a significant constitutional obstacle to the unprecedented and dangerous course you charted in your remarks,” Morrisey wrote. “If the Commission proceeds down this pathway, states and other interested stakeholders will not hesitate to go to court to oppose a federal regulation compelling speech in violation of the First Amendment.”

Disclosures related to ESG issues such as diversity and corporate political spending are outside the SEC’s regulatory purview, the state’s attorney general asserted, and would only serve to provide ammunition for some customers and investors to target companies on those issues.

The SEC should concentrate on disclosures that affect financial performance rather than “statements on issues that drive a political agenda,” wrote Morrisey, a Republican. “Your proposal would in fact create a system with an unlimited number of additional mandatory statements. This is federal overreach and political activism at its worst.”

The SEC recently released a request for public comment on strengthening climate-risk disclosures, something Lee argued would meet a market demand.

“Of course, we already have an extensive public record demonstrating investor desire for the SEC to ensure better disclosure in this space,” Lee said during an online appearance at a March 15 event hosted by the Center for American Progress. “But, it’s time to move from the question of ‘if’ to the more difficult question of ‘how’ we obtain disclosure on climate.”

Over the last few weeks, the SEC has launched several ESG initiatives, including establishing an enforcement task force on climate and ESG issues.

Sen. Patrick Toomey, R-Pa. and the ranking Republican on the Senate Banking Committee, expressed concern that the task force would give the SEC a way to implement new ESG policies without going through a rulemaking process.

“It is imperative that the SEC provide fair notice, and fully comply with the Administrative Procedure Act if it is going to impose new requirements,” Toomey wrote in a March 24 letter to Lee. “The SEC also should not use enforcement actions as a backdoor for imposing new regulations on ESG and climate change issues.”

An SEC spokesperson declined to comment on Morrisey’s or Toomey’s letters.

Toomey’s worries reflected similar qualms by Republican SEC members Hester Peirce and Elad Roisman about the agency’s recent ESG focus, which has been carried out by Lee, a Democratic SEC member.

That intensity around the issue is likely to continue underGary Gensler, the Biden administration’s nominee for SEC chair, who is awaiting Senate confirmation. He voiced support for enhanced ESG disclosures at his confirmation hearing earlier this month.

Related Topics: Disclosures, Securities and Exchange Commission, Sustainable Investing

===

SLAPP suit retaliation CEI NAM

https://www.climatedocket.com/2018/04/13/nam-sec-climate-lawsuits-liability/

apr 2018

Wang

An industry trade group waging a campaign against communities pursuing climate lawsuits against oil companies said Thursday it has asked the Securities and Exchange Commission to investigate those municipalities.

In:{ a letter to the SEC}:, the National Association of Manufacturers (NAM) said those cities and counties might be misleading investors when they stated in bond offerings that they couldn’t predict the impacts of climate change. In their lawsuits against the fossil fuel industry, the group said, those communities included projections of some of the potential impacts, such as the frequency of severe flooding, and the rising costs to adapt to them.

The complaint targets eight municipalities in California that have filed lawsuits, as well as New York City. The tactics are similar to those industry used against legal campaigns to hold companies accountable for the health impacts of tobacco, asbestos and lead paint. This time the industry group is claiming the cities pursuing the suits are the ones hiding or misrepresenting facts about climate change, not oil companies.

“These claims have no merit,” said Matthew Edling, a partner at Sher Edling, the law firm representing several California communities. “If NAM were honest about its interest in accuracy and truth, it would be asking the SEC to investigate fossil fuel companies for suppressing what they knew about climate risks for nearly 30 years. But instead it continues to do the fossil fuel industry’s dirty work.”

A spokesman for New York City said the city stands by the statements it made in bond offerings.He added, “This is yet another bogus attempt to mislead the public about Big Oil’s responsibility for climate change. We are continuing to take climate action to protect New Yorkers from the risks of rising seas, stronger storms, and hotter temperatures, and that includes holding Big Oil accountable for its role in causing climate change while hiding behind a decades-long campaign of deception and denial.”

The letter to the SEC reflects the deepening worry by the group and other supporters of fossil fuel companies over the growing number of climate lawsuits. :{NAM announced late last year}: it had launched an initiative called the Manufacturers’ Accountability Project (MAP) specifically to oppose the lawsuits and the investigations of ExxonMobil by the attorneys general of New York and Massachusetts. It claims the lawsuits and investigations are politically motivated and seek to enrich lawyers at the expense of American business.

Several California cities and counties, including Marin County and Imperial Beach,:{first filed suit}: last summer.:{More communities}:, such as San Francisco, Oakland and Richmond, followed suit. New York City:{sued}: in January.

In February, :{NAM said}:it was submitting public records requests to the cities and counties to seek documents, including contracts with law firms and correspondences, that involved the lawsuits.

NAM’s letter to the SEC followed a similar effort:{by the **Competitive Enterprise Institute**:(style="box-sizing:border-box"):}: in February. ExxonMobil made the same claims in:{a January petition}: to a state court in Texas. That was part of Exxon’s larger effort to fight the climate lawsuits as well as the state investigations. In the petition, Exxon is seeking to depose California city and county officials.[IN TEXAS?!]

An SEC spokeswoman declined to comment on the letter. Michael Gerrard, faculty director of the Sabin Center for Climate Change Law at Columbia University,:{told Bloomberg}: that the SEC is unlikely to launch an investigation over the climate risk language in municipal bond documents, noting the agency’s typically:{lax enforcement}: of the climate disclosure requirement.

===

no lnx

https://www.dutchnews.nl/features**/2021/05**/meet-the-dutchman-twisting-the-arm-of-the-worlds-most-powerful-polluters/

On Tuesday, at Royal Dutch Shell’s AGM in The Hague, one man − supported by a growing army of shareholders − will tackle Europe’s highest grossing company from within when he seeks approval for a resolution, opposed by directors, for a speedier and more ambitious transition to green energy. If the planet survives to tell the tale, Dutch national Mark van Baal might one day be remembered as the man who had the greatest impact on reversing climate change. The former energy journalist’s draft novel about a CEO of an oil firm changing the course of history by steering the company towards renewables struck a duff note, but sparked the idea for Follow This, a movement he founded in 2015 based on shareholder activism within some of the world’s most polluting companies, including Chevron, Royal Dutch Shell and BP.

Striking at the top

‘The oil industry can make or break the Paris Agreement,’ says Van Baal (52), who believes striking at the heart of pollution powerhouses is the most effective way to reverse climate change. Follow This’s counter-intuitive approach invites changemakers to buy a share in Big Oil (from €9) via their website and then send an email to the CEO, introducing themselves as their newest shareholder and pledging their support to help them make the switch to green energy. Inspired by TCI − who in 2007, with a mere 1% stake in ABN Amro, got the backing of shareholders to split the bank into three parts − Van Baal saw an opportunity to significantly reduce global emissions by building shareholder support for green resolutions in our most polluting corporations, while garnering media interest.

His strategy to take on multinationals from the grassroots raised a few eyebrows and was widely dismissed as ‘a sympathetic initiative’. But when his wife showed him a viral video of a lone dancer in a park evolving into a huge dance party, he recognised such doubt and derision as part of the journey to success, and the name ‘Follow This’ was born. ‘One of the lessons [I learnt],’ he says, ‘is that to get something like this off the ground, you just have to do it and run the risk of being ridiculed in the beginning.’ Follow This founder Mark van Baal addresses the board of directors at the Shell AGM in The Hague in 2018. Photo: Follow This

Transforming from within

Big in ambition, but small in stature, he cut a lonely figure when he rose nervously from a seat at the back of Shell’s packed AGM in 2015 and introduced himself to CEO Ben van Beurden, telling him: ‘I believe you can change the world.’ A David squaring up to Goliath, he urged the panel of directors not to devalue shareholders’ investments by making Shell ‘the next Kodak’, and ‘to put their brains and their billions behind renewable energy’ instead. ‘We are not asking you to stop paying dividends. I would be lynched in this place,’ Van Baal tells the room with a smile, stressing the strong business case for the transition (fossil fuels are becoming scarcer and more expensive to extract, while renewables are falling in price).

And when told the transition is harder than he thinks, he quips: ‘We have more confidence in you than you have in yourself, apparently.’

Investment

As for confidence in Follow This, support was snowballing, bolstered by deep-pocketed investors with a green agenda and the backing of key players such as environment minister Stientje van Veldhoven, and Jan Rotmans, the founder of Urgenda, who in 2015 won a landmark case ruling that the Dutch government had a legal responsibility to act immediately to reverse climate change. Today, over 6000 individuals have donated a total of around €20m in shares to the cause. ‘It’s amazing how many people want to contribute to this,’ says Van Baal, who believes solar panels, vegetarianism and not flying are all very well, but are not enough to stop global warming. ‘People feel pretty powerless against climate change. They thought: this can make a difference.’ The world’s biggest oil and gas companies. Source: Statista Biggest polluters

It takes guts, but engaging with Big Oil may be our best hope of keeping temperature rises to below 2 degrees as the burning of fossil fuels accounts for 87% of the world’s CO2 emissions. Research undertaken by the Climate Accountability Institute ranked Shell the 7th highest polluting company in 2019. A ruling is due later this month for a case brought against them by Milieudefensie for violating Dutch liability law by producing double the Netherlands’ legal limit of carbon emissions. In the Netherlands, greenhouse gas emissions per capita are still 34% above the EU average due to our reliance on fossil fuel.

In 2019, just 8.8% of the energy used in the Netherlands was sustainably sourced, one of the lowest in the EU. Iceland, by contrast, was powered by 78% renewables. ‘The fossil fuel interests are very big in the Netherlands,’ says Van Baal. ‘The story was always that we have so much natural gas in the north of the Netherlands that the government is dependent on it so we can’t change it so fast. Now, because of the earthquakes in Groningen, now suddenly it’s possible to do without the income.’ Carbon dioxide emissions in the Netherlands are gradually declining but our dependence on fossil fuels, say environmentalists, limits our progress. Source: CBS Shortcomings Dutch lawmakers have also tightened their grip on shareholder activists like Follow This, who now require a 5% stake to table motions in the Netherlands. Of course, Big Oil does not always appreciate being told home truths about an industry which has − until recently − served investors so well.

The atmosphere at some AGMs has been hostile at times, with Van Beurden accusing Van Baal of trying to take leadership at Shell’s 2018 AGM. Follow This, he reminds him with headmasterly authority, must ‘Follow us’. And sometimes the pressure group itself can inadvertently hinder progress. Campaigns without ambitious, concrete targets can end up functioning as fig leaves for CEOs, says Van Baal, citing Climate Action 100+’s softly-softly approach as an example. Concrete results Despite the challenges, Follow This’s impressive results suggest that the method is working. The inclusion of Scope 3 emissions in Shell’s 2017 climate targets, for example, was an unanticipated success which Van Baal says still gives him goosebumps. Creating traction in the US has been harder, but just last week, a record 58% of shareholder voters in Alaskan oil giant ConocoPhillips supported a motion brought by Follow This to reduce all of the company’s direct and indirect emissions – a huge endorsement for the resolution, whose equivalent at Shell has taken five years to creep from 2.7% to 14.4% of voters.

Citing the risk of litigation that polluters now run, as well as the prospect that fossil fuel projects become ‘stranded assets’ in a fast-changing energy landscape, the motion marked a turning point in North American big oil, which, since Biden, has seen the Securities and Exchange Commission grant greater freedom to shareholders to make climate proposals. Shareholder support for Follow This’s climate resolutions has grown steadily since the NGO’s inception. Source: Follow This Optimism

Whether the scales will also tip at Shell on Tuesday, remains to be seen. Shell has written to all shareholders advising them to support the directors’ climate resolution over Follow This’s more ambitious alternative. Though Shell asserts that its carbon production peaked in 2018, the company’s 2030 targets, say Follow This, still fall short of the Paris Agreement, and the rising demand for energy is being met by further oil exploration in the Arctic with no more than 1% of revenue invested in renewables.

Whatever happens, Big Oil − believes Van Baal − will in time burn itself out. ‘If we leave them alone, they will eventually go bankrupt, but it will take too long. It will put too much CO2 in the air,’ he says. And, despite some harsh criticism from his wife, he still thinks his novel is a good read and that the plot is realistic. ‘I’m quite optimistic, but I have to be,’ he says. ‘This is the only thing that’s going to work.’

Jay Clayton - SEC.gov

https://www.sec.gov › biography › jay-clayton

:{:(style="border-color:#006621;;border-style:solid;border-width:5px 4px 0px;width:0px;height:0px;margin-left:3px;top:7.5px;margin-top:-4px;position:absolute;left:0px"):}:

:{Jay Clayton was nominated to :{chair:(style="font-weight:bold"):}: the U.S. Securities and Exchange Commission on January 20, 2017, by President Donald Trump and sworn in on May 4, ...:(style="overflow-wrap:break-word"):}:

Jay Clayton (attorney) - Wikipedia

https://en.wikipedia.org › wiki › Jay_Clayton_(attorney)

:{:(style="border-color:#006621;;border-style:solid;border-width:5px 4px 0px;width:0px;height:0px;margin-left:3px;top:7.5px;margin-top:-4px;position:absolute;left:0px"):}:

:{Walter Joseph "Jay" Clayton III (born July 11, 1966) is an American attorney and Chairman of the U.S. Securities and Exchange Commission. Contents. 1 Education; 2 Career; 3 :{SEC Chairman:(style="font-weight:bold"):}:.:(style="overflow-wrap:break-word"):}:

**Political party**‎: ‎Independent

Education‎: ‎Lafayette College‎; ‎University of Pe...

President‎: ‎Donald Trump

Born‎: ‎Walter Joseph Clayton III; July 11, 1966 ...

Education · ‎Career · ‎SEC Chairman

Securities and Exchange Commission appointees - Wikipedia

https://en.wikipedia.org › wiki › Securities_and_Exchange_Commission_a...

:{:(style="border-color:#006621;;border-style:solid;border-width:5px 4px 0px;width:0px;height:0px;margin-left:3px;top:7.5px;margin-top:-4px;position:absolute;left:0px"):}:

:{Members of the U.S. Securities and Exchange Commission are appointed by the President of ... The President also designates one of the commissioners as :{chairman:(style="font-weight:bold"):}:, the :{SEC's:(style="font-weight:bold"):}: top executive. Service may continue past term expiration up to ...:(style="overflow-wrap:break-word"):}:

Roosevelt · ‎Truman · ‎Eisenhower · ‎Nixon

https://www.cnbc.com/2019/11/05/reuters-america-update-1-u-s-sec-proposes-rules-that-could-limit-shareholder-voices.html

Nov 5 (Reuters) - Wall Street’s top regulator on Tuesday proposed a pair of long-awaited rules that would set new limits on shareholders ability to call for corporate changes on thorny issues like climate change disclosures and executive compensation In one of the biggest wins for the corporate lobby under President Donald Trump, the U.S. Securities and Exchange Commission voted 3-2 along partisan lines to raise the re-submission thresholds for motions that shareholders file on company ballots and to put new requirements on firms guiding investors how to vote in corporate elections.

Both shareholder proposals and proxy advisory firms are cornerstones of corporate governance and how investors hold management accountable.

Both changes will be subject to public comment.

Democrats Rob Jackson and Allison Herren Lee voted against the rules, saying they tilted the playing field toward corporate management.

“In each aspect of todays two proposals, the odds are stacked against shareholders,” Lee said.

The current thresholds for re-submissions of proposals date from 1954, SEC officials said. Under the new rule, proposals resubmitted to companies within five years must have won 5% support in the past, up from 3% under current guidelines, with other minimum thresholds increasing for the second and third times proposals are submitted, SEC officials said.

The agency’s proposed rule aims to end shareholder proposals that appear on corporate ballots with diminishing levels of support, officials said.

The SEC also proposed to require proxy advisory firms to give companies two chances to review their recommendations before they are sent to shareholders.

Proxy advisory firms, including Institutional Shareholder Services Inc., recommend to investors how to vote and cast ballots on behalf of some asset managers.

Tuesday’s proposal seeks to impose a “review and response process” by allowing companies five days to review proxy adviser proposals and provide feedback to the advisers, who would then have two days to notify companies when they will send their recommendations, SEC officials said.

The process aims to “allow advisers and companies to better communicate about the aspects of the proxy advisory report that meets a standard of interest” on proposed issues, they said.

Industry groups, like the U.S. Chamber of Commerce, which lobbied aggressively for the proposals, praised the SEC’s moves.

“The current opaque system of proxy advice degrades the information available to investors,” Tom Quaadman of the Chamber told Reuters.

ISS President and Chief Executive Gary Retelny said in a statement that institutional investors, which hire proxy advisers, had not called for the new rules.

Rulemaking typically is a lengthy and deliberative process and one can hope the SEC listens to and addresses the concerns of the investors it is charged with protecting.”

Jackson said the agency should have a taken a more “nuanced approach” in its data analysis to determine which shareholder proposals are value-enhancing versus value-destroying, and tailored the proposal accordingly.

“Whatever problems plague corporate America today, too much accountability is simply not one of them,” he said.

In August, the SEC issued guidance that aimed to clarify how investors and firms that vote on their behalf should cast their ballots in corporate elections.

The guidance addressed some of the grievances U.S. corporations have long had about proxy advisers, such as mistakes in reports advisers issue on specific companies and conflicts of interest in their business models.

ISS last week sued the SEC over its guidance amid worries by investors that it may diminish voting rights and constrain shareholders’ ability to hold corporations accountable.

1219

Trump's SEC is proposing a dangerous rule change that would silence shareholders and undermine corporate accountability efforts. This move will help inoculate powerful Wall Street companies and wealthy CEOs to pressure from their own shareholders.

The rule would make it harder to file shareholder petitions by increasing the ownership stake needed in order to do so by ten fold. It would also increase the percentage of support a petition would need to garner from shareholders in order to stay alive.

Shareholder resolutions have been used for decades to ensure better corporate governance and to advance important causes like gay rights, gender and racial equity, and environmentalism -- concerns for which the recent, much-lauded statement issued by major CEOs through the Business Roundtable implies support. For instance, employees recently used their company-issue stock to pressure Amazon to reduce its contribution to climate change because of its impact on the world and on Amazon's own business.

Now the SEC is looking to undermine shareholder proposals and make it harder advocates from constraining corporate abuses. We need to stand up and fight back to protect the ability of shareholders to shape the governance of corporations they invest in.

1019

Hey Securities and Exchange Commission, if you are watching. Someone is trading on insider info

Daily Kos

===

https://www.ecowatch.com/warren-climate-risk-disclosure-act-2640576122.html

The Green New Deal has been the focal point of the climate debate among the Democratic presidential candidates. Less publicized is the Climate Risk Disclosure Act, a proposal from Senator and presidential contender Elizabeth Warren, that seeks to frame climate change as a threat to the public markets.

The idea: force companies to publicly disclose how their valuation would fare should climate change continue versus how they would do should temperature rise be capped at 1.5 degrees Celsius higher than pre-industrial levels, the benchmark outlined in the Paris agreement.

"The Climate Risk Disclosure Act empowers investors to make smart decisions about where to invest their money by requiring that public companies be straight about how climate change and related policies will affect their bottom lines," said Sen. Warren in an exclusive statement sent to Cheddar. "Shareholders weighing this new information will compel big companies to speed up the transition to a clean energy economy, reducing the odds of an environmental and financial disaster without spending a dime of taxpayer money."

First proposed in 2018, and reintroduced with changes earlier this summer, Warren's bill would use the Securities and Exchange Commission to force publicly-traded companies to confront their own position within the climate crisis — and share that information with investors. The law, the Senator's office explains, would also have companies reveal their direct and indirect greenhouse gas emissions, share the total fossil fuel assets they own or manage, and outline their climate change risk management strategies.

It's certainly not the only climate proposal from the Massachusetts senator, but the Climate Risk Disclosure Act does appear fundamentally Warren-esque in its hope to use regulatory agencies — in this case, the SEC — to push the free market toward a less environmentally-destructive future.

Notably, the legislation was co-sponsored by several other presidential hopefuls, including Sen. Kamala Harris, Sen. Cory Booker, and Sen. Amy Klobuchar. It has also won the endorsement of sustainability advocacy organizations, including the Coalition for Environmentally Responsible Economies (Ceres) and the U.S. Forum for Sustainable and Responsible Investment (US SIF).

Rep. Sean Casten (D-Ill.) introduced the bill in the House, where it just passed the House Financial Services Committee.

"Public corporations must take responsibility for the large financial risks posed by the impacts of climate change, while embracing the economic opportunity of being global leaders in developing a clean energy economy," said Casten in a statement to Cheddar. "Our bill utilizes market mechanisms to incentivize climate action by ensuring that corporations disclose the risks posed by climate action to the benefit of their shareholders and the public."

This is not the first time an idea like this has come up. As early as 2007, state officials, investor advocates, and climate groups — including Ceres, Friends of the Earth, and Environmental Defense — had begun pushing the SECto issue guidance as to how companies should disclose risks related to climate change.

"Companies' financial condition increasingly depends upon their ability to avoid climate risk and to capitalize on new business opportunities by responding to the changing physical and regulatory environment," they wrote in a letter to the agency. For instance, the organizations argued the physical impact of climate change could impact a company's ability to operate or expose it to new legal proceedings.

Three years later, the agency commissioners — in [a party-line vote] — finally issued guidance suggesting how companies might go about disclosing the risks related to the impact of climate change. The guidance noted that climate change could impact how a business described itself, its legal proceedings, managements' discussion and analysis of operations, and risk factors facing the company.

"It did not change any of its rules. It just said our current rules mandate addressing the risks of climate change," explains Alan Palmiter, a business law professor at Wake Forest University.

Palmiter has written that, at first, the SEC's guidance drew a good amount of attention. He found that a "flurry" of law firms sent letters to their clients notifying them of the new guidance, with many noting that the SEC could take further action on the subject.

However, Palmiter found that some law firms were unsure how to follow the guidance. Some also questioned the capacity of companies to determine how climate change might affect them, and some doubted the existence of climate change altogether, he found.

But despite some initial fanfare, the guidance didn't seem to have much impact on how many — or how much — companies disclosed about their climate risks. Palmiter notes that "during the first years after the SEC guidance, fewer than three-fifths of companies in the S&P 500 mentioned climate change in their 10-K annual reports" and that most of these were simply "a short one-paragraph risk factor."

In 2014, Ceres argued the SEC had not prioritized "the financial risks and opportunities of climate change as an important disclosure issue."The non-profit noted that the agency comment letters related to the adequacy of climate change-related disclosures had dwindled from 38 in 2010 to none in 2013. Many companies had said nothing about climate change in their annual SEC filings, the organization found, and disclosures were highly variable, often revealing little detailed information.

Two years later, the SEC requested comment on a wide range of issues, including climate change, but there doesn't appear to have been any subsequent action under the Trump administration. Last year, the SEC also received a request for a petition for broader rulemaking governing "environmental, social, and governmental" disclosures.

When asked about its guidance for companies in regard to climate change, the SEC directed Cheddar to the 2010 guidance. The agency did not respond to follow-up questions as to whether further guidance had been issued since then and why enforcement appears to have slowed.

The Government Accountability Office's February 2018 review of the guidance found that the SEC was limited because it "primarily relies on information that companies provide," couldn't subpoena more information, and the information it did have wasn't standardized across companies. It also reported that industry associations said "they consider the current climate-related disclosure requirements adequate and no additional climate-related disclosures are needed," but that "some investor groups and asset management firms have highlighted the need for companies to disclose more climate-related information." Echoing the GAO, Jim Hempstead, a managing director at Moody's told Politico this June, "Climate disclosures that are coming out right now are all over the map," and implying that disclosures "comparable across companies" would be more helpful.

Warren re-introduced the legislation this summer, saying it would "give investors, and the American public, the power to hold corporations accountable for their role in the climate crisis."

The failure of the 2010 guidance has been at the foundation to push this bill ahead, with the leaders of both Ceres and US SIF, citing the SEC's "lax" enforcement in their support for Warren's 2019 Climate Risk Disclosure Act.

Whether the bill will be passed or not, like so much of a growing slate of bills meant to combat the climate crisis, may rest on the ability of Democrats to win back the Senate and the White House in the upcoming election.

And while it's not likely to be signed into law yet, Bryan McGannon, director of government relations at US SIF, notes: "It builds a track record."

This story originally appeared in Cheddar. It is republished here as part of EcoWatch's partnership with Covering Climate Now, a global collaboration of more than 250 news outlets to strengthen coverage of the climate story.

519

Comcast Is Latest Telecommunications Company to Drop ALEC

By David Armiak — The news of Comcast’s departure was made public in a U.S. Securities and Exchange Commission filing calling for increased lobbying disclosure by Comcast.

Read more >>

vox

Musk is finally facing some consequences for his August take-Tesla-private dance. The South African–born billionaire will step down as chairman of the electric car company and pay a $20 million fine as part of a settlement with the Securities and Exchange Commission. The SEC had sued Musk on Thursday after he reportedly turned down an initial deal at the last minute.

As part of the new agreement announced on Saturday settling the SEC’s suit, Musk will resign as Tesla chairman within 45 days, and he won’t be able to be reelected to the post for three years. Musk and Tesla will each pay a separate $20 million penalty, which will be distributed to harmed investors, and Tesla will appoint two new independent directors to its board. A judgewill have to approve the settlement.

Tesla will also hire a lawyer to keep an eye on Musk’s communications as part of the settlement because, the SEC alleges, the company failed “to implement disclosure controls or procedures” related to the CEO’s Twitter activity. In other words, Musk is getting a Twitter babysitter.

This — at least for now — brings to a close a dramatic chapter for Tesla that was ignited when Musk tweeted on August 7 that he was considering taking Tesla private at $420 per share and had already secured funding. It wasn’t clear how much groundwork had actually been laid for such a maneuver, and it’s illegal for companies and executives to give shareholders misleading information about potentially meaningful corporate events. The tweets were the basis of the SEC’s lawsuit against Musk for securities fraud.

CMD?

In a victory for environmental and shareholder activists, the Security and Exchange Commission (SEC) has denied ExxonMobil’s request to prevent a shareholder vote on a resolution requiring the oil giant to disclose its political spending, including “dark money” contributions to advocacy groups and trade associations.

The SEC ruling comes on a shareholder proposal brought by the Unitarian Universalist Association (UUA) that would require Exxon to compile a semiannual report on its “political contributions and expenditures (direct and indirect) with corporate funds,” as well as related company policies, and post it on the company’s website.

The SEC also rejected Exxon’s attempt to prevent a vote on a resolution brought by an activist shareholder to create a board-level committee to review and oversee the company’s strategy on climate change.

The SEC rulings were first reported by Climate Liability News.

Dark Money

Dark money is money used to influence elections that is passed through trade associations and advocacy groups in a way that obscures its true source. These groups can take money from corporations, unions, and individuals, and, for example, air TV ads to influence elections, without disclosing where the money came from.

In trying to deny the resolution’s place on the shareholder ballot, to be voted at its May 29 annual meeting, Exxon claimed that it did disclose its policies having to do with political contributions. UUA correctly noted, however, that Exxon only discloses direct contributions to candidates, candidate committees, PACs and party committees. Money run through other nonprofit groups is not disclosed.

According to the Climate Investigation Center, fossil fuel and corporate trade groups spent $1.4 billion on PR firms and ad buys between 2007 and 2018. How much of that money is Exxon’s is unknown.

Taking Climate Change Seriously

The climate shareholder proposal, brought by Arjuna Capital, calls for Exxon to create a new board committee to “assess the company’s responses to climate related risks and opportunities, including the potential impacts of climate change on business, strategy, financial planning, and the environment.”

Exxon claimed that it already considers climate change through a committee with a broad mandate to evaluate the company’s health and safety and environmental performance.

According to Climate Liability News, Arjuna Capital argued that Exxon “has no specific mention of climate change in its charter and while it may address climate change to an extent, the wide array of issues under its jurisdiction do not provide the specialized focus necessary to address the ‘more strategic climate change issues concerning investors, including the emissions associated with burning the company’s product.'”

Most people would think that Exxon has a committee at the board of director level to tackle climate change by itself, but it does not.

Arjuna Capital noted that with only one climate expert on its board, the company is ill-prepared to deal with the biggest threat to its business and shareholders in this century....

===

https://www.exposedbycmd.org/2018/07/11/democrats-reintroduce-disclose-act-combat-dark-money-poison/

On June 27, Democrats in both chambers of Congress reintroduced the DISCLOSE Act to provide what the lead Senate sponsor, Sheldon Whitehouse (RI-D), calls “a commonsense solution to restore transparency and accountability in our political system.”

The DISCLOSE Act of 2018 is the most recent iteration of a bill that Democrats have pushed since the Supreme Court’s ruling in Citizens United v. FEC, which eliminated a century-old federal ban on political spending by corporations.

The “Democracy Is Strengthened by Casting Light On Spending in Elections Act” (DISCLOSE) was first introduced in 2010 by Representative Chris Van Hollen and Senator Chuck Schumer. DISCLOSE passed in the House that year but a Republican filibuster threat doomed it in the Senate, despite support from 59 senators.

DISCLOSE ACT WOULD SHINE A LIGHT ON DARK MONEY

The 2018 Senate bill comes out of the gate with all Senate Democrats and both Independents supporting it. The companion legislation in the House, introduced by Congressman David Cicilline (D-RI), already has 159 cosponsors.

As things stand today, corporations and wealthy donors can make unlimited expenditures to support or oppose political candidates through super PACs, independent expenditures, and dark money groups, with much of it hidden from the public. The result is a system where billionaires and large corporations dominate the political landscape with little or no accountability. As two Princeton political scientists put it in a recent study of influence in American politics, “economic elites and organized interest groups play a substantial part in affecting public policy, but the general public has little or no independent influence.”

The Brennan Center for Justice released a report in 2016 that found that “dark money sources often hold direct economic interests in the election outcome.” In the absence of effective disclosure laws, special interests are able to launch campaigns on policy issues and influence how people vote while hiding their stake in the outcome. “When viewers learn more about an ad’s sponsor — for instance, that it’s an out-of-state group or a group that does not report its donors — they may become not only more skeptical about the ad’s message but also more critical of the ad’s intended beneficiary,” the report concluded.

In a recent interview, Rep. Cicilline and Sen. Whitehouse spoke about the importance of the DISCLOSE Act in restoring the integrity of our democracy. “Eight out of ten” Americans do not have faith in our democratic institutions due to the influence of money-in-politics, Whitehouse said. He emphasized that Americans want to have a government that “works for the benefit of the many.”

According to Sen. Whitehouse, dark money “has been poisonous to the American democracy we cherish.” Whitehouse believes that increased transparency would encourage congressional debate about the “merits of clearing dark money out of our political system.”

“The cockroaches are everywhere. I say let’s turn on the lights,” Whitehouse said.

Common Cause, a leading nonpartisan group fighting for campaign reform, praised the proposed law as “grounded in the principle expressed by the late Supreme Court Justice Louis Brandeis that ‘sunshine is the best disinfectant.'”

The DISCLOSE Act of 2018 would mandate that organizations spending money in elections —including super PACs and tax-exempt 501(c)(4) groups — must promptly disclose their donors who have given $10,000 or more during an election cycle, and report expenditures of $10,000 or more on election ads within 24 hours. In addition, the bill includes provisions to prevent complex money webs from shielding the identities of donors.

Like the 2017 version of the bill, the 2018 DISCLOSE Act would also “ban campaign contributions and expenditures by corporations that are controlled, influenced, or owned by foreign nationals.”

In a new provision, the bill would repeal controversial riders the Republicans forced through on spending bills that prevent theSecurity and Exchange Commission (SEC) from requiring public companies to disclose their political spending to shareholders, bar the IRS from developing post-Citizens United regulations on political spending by 501(c)(4) organizations, and block the government from requiring federal contractors to disclose their political donations.

Lastly, the bill contains a “Stand by Your Ad” provision, authored by Sen. Wyden (D-OR), requiring corporations, unions, and other organizations paying for political ads to disclose their top five funders. A similar proposal earned the support of 59 senators in 2010 but was filibustered by the Republicans.

The 2018 DISCLOSE Act is supported by numerous reform groups, including Americans for Campaign Reform, Brennan Center for Justice, Campaign Legal Center, Citizens for Responsibility and Ethics in Washington, Common Cause, Democracy 21, Demos, League of Women Voters, People For the American Way, Public Citizen, and the Sunlight Foundation.

VIGOROUS OPPOSITION FROM THE RIGHT

Opponents of the DISCLOSE Act include the Institute for Free Speech (formerly known as the Center for Competitive Politics), The Heritage Foundation, Americans for Tax Reform, The American Conservative Union, CatholicVote.org, and Citizens Against Government Waste.

These groups argue that the act violates the First Amendment, but a Brennan Center analysis found that “there can be no credible doubt” that a similar 2012 version of the DISCLOSE Act was fully constitutional. As Common Cause points out, “the Supreme Court has repeatedly rejected any arguments that disclosure requirements silence speech” and has continually upheld their constitutionality on the grounds that the public has a right to know who is influencing an election. Even the late Justice Antonin Scalia supported disclosure, writing in *Doe v. Reed that “[r]equiring people to stand up in public for their political acts fosters civic courage, without which democracy is doomed.”*

Senator Elizabeth Warren said in an April speech that the DISCLOSE Act would expose the “billionaires [who] have been pouring unlimited, secret money into the hands of carefully picked candidates who will do their bidding.”

Those billionaires fund many of the organizations that oppose the DISCLOSE Act. The Institute for Free Speech (IFS), for example, is funded by conservative donors — such as Richard Uihlein and the Koch brothers — who support Republican candidates and may not want their donations made public.

In 2016, The Bradley Foundation gave IFS $125,000 to fight those calling for greater disclosure rules, something the Bradley Foundation claims will “chill speech,”according to documents acquired by the Center for Media and Democracy.

Rep. Cicilline argues that the lack of disclosure after Citizens United has led to more business-friendly legislation and that dark money in politics leads to “bad public policy.” “The DISCLOSE Act will bring a new level of transparency to our elections. It will ensure the American people know who is really fighting for them. It will restore public faith in our government. It will mark a major step towards fixing what’s broken in Washington,” Cicilline said.

The DISCLOSE Act is part of the Democrats’ broader plan, called “A Better Deal for Our Democracy,” aimed at fixing the federal campaign finance system, improving elections, and strengthening ethics laws.

https://insideclimatenews.org/news/21092016/exxon-sec-questions-financial-risks-climate-change-eric-schneiderman-ny

9/16

Just when the legal and legislative jousting over Exxon's climate record seemed to be bogging down in posturing and partisanship, the powerful Securities and Exchange Commission has stepped in with pointed questions about the oil giant's disclosures of the risks of global warming.

The development, coming a year after a series of investigations were sparked by reports by InsideClimate News and other news organizations, is significant in at least three ways.

First, the SEC's new involvement turns the Exxon investigations from a matter being pursued by a handful of state attorneys general into a federal case.

Second, the action underscores that the issue goes far beyond mere uncertainties in climate science, or policy differences about addressing the mounting climate crisis, and involves significant financial risks to Exxon and its investors. The SEC is not only interested in what Exxon's scientists knew, but what its accountants knew, too.

Third, and perhaps most significant, the SEC's involvement backs the Exxon questioners' contention that they are not merely on a partisan witch hunt, as Exxon's defenders have been trying to paint their investigations.

All of the attorneys general known to be investigating Exxon are elected Democrats, and some of their Republican counterparts have come to Exxon's defense by challenging the state subpoenas. So have Republicans in Congress, including those on the House Science Committee, who charge that the AGs have been colluding with environmental advocates to infringe on the company's rights.

The SEC, on the other hand, is not just a dogged regulatory agency, but a scrupulously non-partisan one, independent of political influence by statute and design. It is focused on enforcing transparency in the financial reports of publicly traded companies. And it is increasingly intent on making sure that climate risks are properly disclosed.

"At the end of the day," Mary Jo White, the commission's chairwoman, said in a speech shortly after President Obama selected her to lead the agency, "we make our decisions based on an impartial assessment of the law and the facts and what we believe will further our mission—and never in response to political pressure, lobbying, or even public clamor." She pointed out that the commissioners include two Democrats, two Republicans, and herself—an Independent.

The Wall Street Journal first reported on Tuesday that the SEC has opened its probe of Exxon's accounting and risk disclosures. The company's outside auditors, PriceWaterhouse, are also being questioned, and the SEC has been receiving information provided by Exxon to New York's attorney general as well, the Journal reported.

The article, which is based on unnamed sources, said that beyond the implications for Exxon, "the probe may also signal the opening of a new front of climate-related regulation and enforcement at the SEC, a direction with far-reaching consequences for the oil and gas industry."

http://www.commondreams.org/news/:{2016/09/20:(style="background-color:#ffff66;"):}:/sec-probe-called-possible-moment-reckoning-exxons-climate-crimes

...In what is being hailed as "a remarkably important development," the U.S. Securities and Exchange Commission has reportedly launched an investigation into whether Exxon Mobil deliberately deceived investors over the long-term value of its fossil fuel assets in light of the climate crisis.

Citing "people familiar with the matter," the Wall Street Journal reportedTuesday that "[t]he SEC sought information and documents in August from Exxon as well as the company’s auditor, PricewaterhouseCoopers LLP. The federal agency has also been receiving documents that the company submitted as part of a continuing probe into similar issuesbegun last year by New York Attorney General Eric Schneiderman."

In addition to "examining Exxon's longstanding practice of not writing down the value of its oil and gas reserves when prices fall," the federal probe "is also homing in on how Exxon calculates the impact to its business from the world's mounting response to climate change, including what figures the company uses to account for the future costs of complying with regulations to curb greenhouse gases as it evaluates the economic viability of its projects," the Journal reported.

Reporters Bradley Olson and Aruna Viswanatha said the investigation "represents an escalation of the legal questions Exxon faces over its past and future response to climate change." Further, they observe that the probe "may also signal the opening of a new front of climate-related regulation and enforcement at the SEC, a direction with far-reaching consequences for the oil and gas industry."

Environmental activist and 350.org co-founder Bill McKibben agreed that this marked "a remarkably important development" in the effort to hold the world's largest publicly traded oil and gas company accountable for decades of suppressing scientific evidencerelated to global warming.

Annie Leonard, executive director of Greenpeace USA, also welcomed the news."The federal government is joining the courageous state attorneys general, and they're all following the trail of clues that began with powerful investigative journalism," McKibben said, referencing reporting by the Los Angeles Times andInside Climate Newswhich first brought what is now known as the #ExxonKnew scandal to the public's attention. "Before they're done we'll understand considerably more about how the world overheated—but in the meantime, every institution that invests in Exxon should take real note of who you're keeping company with."*

"Exxon’s current market valuation is partly based on its proven reserves," explained Leonard, "a giant bank of already discovered oil and gas deposits that it plans to someday exploit and sell. But in a world where we successfully tackle climate change, many of those assets would be left in the ground. Investors have a right to understand how Exxon’s profitability and value are threatened by common sense policies to address climate change, and the SEC seems to agree."

"Right now Exxon is betting everything it has on the failure of the world to solve the climate crisis; the SEC has a chance to expose how weak Exxon’s hand really is," she said.

"Millions of people around the globe have long demanded action to hold Exxon accountable," said Corporate Accountability International senior international organizer Katherine Sawyer. "This investigation marks a moment of reckoning for the corporation. Coupled with attorneys general investigations into Exxon's campaign of climate denial, the SEC's probe means the corporation's days of deception are numbered."

The federal probe comes amid an ongoing public battle between the environmental groups and attorneys general spearheading the state-level investigations and Republican lawmakers on the U.S. House Committee on Space, Science and Technology, who have attempted to stymie the probes by issuing subpoenas to those involved.

This work is licensed under a Creative Commons Attribution-Share Alike

http://www.ecowatch.com/shell-climate-video-2290679999.html

Oil giant Shell also knew of the dangers of climate change decades ago, while it continued to lobby against climate legislation and push for fossil fuel development, a joint investigation by The Guardian and the Dutch newspaper The Correspondent revealed Tuesday.

*:{

}:*

Shell created a confidential report in 1986 which found that the changes brought about by global warming could be "the greatest in recorded history" and warned of an impact "on the human environment, future living standards and food supplies, [that] could have major social, economic and political consequences."

The company also made a 28-minute educational film in 1991, *Climate of Concern,that warned oil extraction and use could lead to extreme weather, famines and mass displacement, and noted that the dangers of climate change were "endorsed by a uniquely broad consensus of scientists." The film was developed for public viewing, particularly for schools.*

"Our energy consuming way of life may be causing climatic changes with adverse consequences for us all," the video states.

"If the weather machine were to be wound up to such new levels of energy, no country would remain unaffected," it continues."Global warming is not yet certain, but many think that to wait for final proof would be irresponsible. Action now is seen as the only safe insurance."

Despite its own warnings, Shell invested billions of dollars into tar sands operations and exploration in the Arctic. It has also devoted millions to lobbying against climate legislation.

The revelations about Shell come after a separate investigation into ExxonMobil revealed that company had also been waging a climate science suppression campaign and burying its own reports on the global warming impacts of fossil fuel use for decades. Exxon, whose former CEO is now U.S. secretary of state, is currently under investigation by theSecurities and Exchange Commission and state attorneys general for allegedly lying to investors about the risks of climate change.

In 2016, a group of lawmakers asked the Department of Justice to look into Shell's knowledge of global warming as well.

"They knew. Shell told the public the truth about climate change in 1991 and they clearly never got round to telling their own board of directors," Tom Burke of the green think-tank E3G, told the Guardian on Tuesday. "Shell's behavior now is risky for the climate but it is also risky for their shareholders. It is very difficult to explain why they are continuing to explore and develop high-cost reserves."

Bill McKibben, co-founder of the environmental advocacy group 350.org, added:

The fact that Shell understood all this in 1991 and that a quarter-century later it was trying to open up the Arctic to oil-drilling, tells you all you'll ever need to know about the corporate ethic of the fossil fuel industry. Shell made a big difference in the world—a difference for the worse.

Patricia Espinosa, the United Nations' climate change chief, said action by fossil fuel companies is critical to combating climate change.

"They are a big part of the global economy, so if we do not get them on board, we will not be able to achieve this transformation of the economy we need," she said.

===

rev dr:

matt T RS bankster no jail hilton head conf SEC

http://www.rollingstone.com/politics/news/why-isnt-wall-street-in-jail-20110216

===

THE LEAKED DRAFT of a presidential memorandum Donald Trump is expected to sign within days suspends a 2010 rule that discouraged American companies from funding conflict and human rights abuses in the Democratic Republic of Congo through their purchase of “conflict minerals.”

The memo, distributed inside the administration on Friday afternoon and obtained by The Intercept,directs the Securities and Exchange Commission to temporarily waive the requirements of the Conflict Mineral Rule, a provision of the Dodd Frank Act, for two years — which the rule explicitly allows the president to do for national security purposes. The memorandum also directs the State Department and Treasury Department to find an alternative plan to “address such problems in the DRC and adjoining countries.”

The idea behind the rule, which had bipartisan support, was to drain militias of revenue by forcing firms to conduct reviews of their supply chain to determine if contractors used minerals sourced from the militias.

The impending decision comes as Trump held a meeting Wednesday with Brian Krzanich, the chief executive of Intel, one of the leading firms impacted by conflict mineral regulations. At the White House today, Krzanich appeared with the president to announce a new manufacturing plant in Arizona.

Human rights advocates — who had celebrated the conflicts rule as a major step forward — were appalled.“Any executive action suspending the U.S. conflict minerals rule would be a gift to predatory armed groups seeking to profit from Congo’s minerals as well as a gift to companies wanting to do business with the criminal and the corrupt,” said Carly Oboth, the policy adviser at Global Witness, in a statement responding to a Reuters article that first reported the move.

“It is an abuse of power that the Trump administration is claiming that the law should be suspended through a national security exemption intended for emergency purposes. Suspending this provision could actually undermine U.S. national security.”

Advanced computer chips, including technology used in cell phones and semiconductors, contain minerals often sourced from war-torn countries in central Africa. Firms such as Intel, Apple, HP, and IBM use advanced chips that contain tantalum, gold, tin, and tungsten — elements that can be mined at low prices in the the DRC, where mines are often controlled by militias fueling a decades-long civil war.

American tech companies, such as Intel, lobbied directly on the rule when it was proposed. But since passage, tech firms have largely used third party business groups to stymie the rule. Trade groups representing major U.S. tech firms and other manufacturers, including the U.S. Chamber of Commerce and the Business Roundtable, attempted to block the rule through a federal lawsuit. In 2014, a federal court struck down a part of the rule that forced firms to reveal DRC conflict minerals on their corporate websites.

Intel is also one of the firms that has touted its effort to comply with the law, publishing a report that notes the company has conducted 40 on-site reviews of smelters in the eastern DRC.

Reuters also reported that acting SEC chief Michael Piwowar has taken steps to also weaken enforcement, asking staff to “reconsider how companies should comply.”

Read the draft memo here:

https://theintercept.com/2017/02/08/leaked-memo-trump-conflict-minerals/

https://theintercept.com/2017/02/17/a-corporate-defender-at-heart-former-sec-chair-mary-jo-white-returns-to-her-happy-place/

MARY JO WHITE, whose tenure as chair of the Securities and Exchange Commission under President Obama bitterly disappointed those who hoped she would aggressively enforce banking laws, is rejoining the corporate defense team at Debevoise & Plimpton, marking her sixth trip through the revolving door between various government jobs and the white-collar defense law firm she calls home.

Debevoise represents numerous major financial institutions under federal investigation, and White will now help those corporate clients manage their legal exposure.

White got the call to return to Debevoise on Inauguration Day, her last day at the SEC. As Debevoise presiding partner Michael Blair told the Wall Street Journal, “We had been waiting to make that phone call for several years.”

This latest trip through the revolving door is particularly disturbing because White declared in ethics disclosure forms before becoming SEC chair that she was retiring from her partnership at Debevoise, receiving a lump sum retirement payment of over $2 million. Instead of staying retired, she immediately went back to Debevoise after her government service ended, pocketing the money.

It is not, however, surprising.

White auditioned for the job promising to police Wall Street aggressively, and be “bold and unrelenting.” But once installed, she spent her time at the SEC operating like she still worked for Debevoise. Her tenure was marked by persistent delays on finalizing rules mandated by the Dodd-Frank Act, including those on corporate political spending and disclosure of the CEO pay ratio. One anti-corruption rule requiring oil and gas companies to disclose payments to foreign governments got finalized so late that Republicans had the opportunity to scrap it earlier this month with a special review procedure.

Critics have charged that White continued the SEC’s tradition of light enforcement. James Kidney, a former SEC trial lawyer, attacked the agency in a scathing retirement speech in 2014, saying that it “polices the broken windows on the street level and rarely goes to the penthouse floors.”

Kidney added, “I have had bosses, and bosses of my bosses … who made little secret that they were here to punch their ticket. They mouthed serious regard for the mission of the commission, but their actions were tentative and fearful in many instances.”

Under White, the SEC failed to monitor stock buybacks to prevent market manipulation. It failed to stop the epidemic of granting waivers to companies automatically banned from securities activities after settling cases of civil and criminal wrongdoing. White stood with Republican commissioners even as Democratic colleagues tried to stop those waivers from being granted. In a troubling continuance of regulatory capture at the agency, White hired a senior Goldman Sachs attorney as the SEC chief of staff.

Though White made a big show of fighting to force companies to admit guilt in any settlement, a break from past practice, in reality this tool was rarely used. According to a letter from Sen, Elizabeth Warren, of 520 settlements from June 2013 to September 2014, only 19 required admissions of guilt. And in the majority of those cases, the SEC only asked for a broad admission of the facts of the case, rather than admissions of specific securities violations. In one example, the SEC got JPMorgan Chase to admit to breaking a law in 2013, but it wouldn’t say which one.

Perhaps the most notable trend of White’s SEC tenure was how she repeatedly recused herself from cases, not only because of her past association with Debevoise (which forced recusal from cases involving Bank of America), but because her husband John White worked as a corporate lawyer at another white-shoe firm, Cravath Swaine & Moore. It’s been rumored that firms would try to sign up with Cravath just to knock White out of enforcement cases.

In the first two years, White recused herself from over four dozen investigations, according to the New York Times. In several cases, this resulted in a 2-2 split on enforcement decisions among the five-member panel, delaying or sometimes ending the offending banks’ cases.

White got ethics waivers to insert herself into some cases involving former clients, like Credit Suisse, despite the conflict of interest. Enforcement against the Swiss bank has been called cozy and soft; a recent $90 million fine for misleading investors was “almost a win-win for the SEC and Credit Suisse,” according to former SEC enforcement attorney David Chase.

Warren asked President Obama to fire White last October, saying “The only way to return the SEC to its intended purpose is to change its leadership.”

Unlike Obama, President Trump does not even pay lip service to that intended purpose, which is to protect investors. Trump’s choice for White’s replacement, Jay Clayton, is also a former corporate lawyer. Clayton worked for Sullivan & Cromwell, which represented Goldman Sachs, among other financial firms. Clayton’s wife Gretchen is a vice president at Goldman Sachs, leading to yet more conflicts of interest. And even before Clayton’s confirmation, the SEC’s acting chairman, Michael Piwowar, has quietly worked to roll back the power of senior attorneys to open investigations into Wall Street misconduct.

White began as an associate with Debevoise & Plimpton in 1976. She became an assistant U.S. attorney under President Carter, then went back to Debevoise to do white collar defense work. In 1990, White returned to the federal prosecutor role, eventually becoming the U.S. attorney for the Southern District of New York, which includes Wall Street, under President Clinton. When that ended, White became a partner at Debevoise from 2002 to 2013, until President Obama tapped her to chair the SEC.

Not only is White returning to Debevoise, but her SEC director of enforcement, Andrew Ceresney, is headed back through the revolving door to the law firm as well.

White will be a “senior chairwoman” at Debevoise, representing corporate clients in government investigations and negotiations. Her 2013 ethics form stated “I will retire from the partnership of Debevoise & Plimpton,” enabling her to take a lump sum retirement payment of a little over $2 million, along with payouts of stock accounts.

U.S. Securities and Exchange commission has declined to say whether it has opened an investigation into ExxonMobil, a position that appears to stymie a sweeping request by Rep. Lamar Smith for records related to a possible investigation of the oil giant by the federal regulatory agency.

SEC chair Mary Jo White wrote in a letter to Smith on Thursday that the commission "generally does not acknowledge the existence or non-existence of an investigation," and that investigations don't become public unless charges are filed.

"Accordingly, I cannot comment specially on the matter raised in your letter," White wrote.

Smith did not respond to a request for comment.

Reacting to news accounts of the SEC's intention to investigate Exxon last month, Smith, the chairman of the House Science committee, asked White to provide information about the purpose, scope and origin of the agency's probe.

In seeking a broad assortment of records, Smith said the committee was "troubled" by the SEC's involvement, adding the federal financial regulatory agency to a list of groups he says are "chilling" climate research with their investigations of Exxon.

Smith asked for documents that may link the White House, the U.S. Department of Justice, the two state attorneys generals and nine non-governmental agencies to the SEC probe.

"The Committee's jurisdiction over energy and environmental research includes an obligation to ensure that such research advances the American scientific enterprise to the fullest extent possible, free from threat of intimidation or prosecution," according to Smith's letter to White.

Smith's request came in the wake of a report by The Wall Street Journal that signaled the SEC's interest in whether Exxon fully disclosed the financial risk posed by climate change to investors.

"While I am aware of the press accounts referenced in your letter, the Securities and Exchange Commission conducts investigations on a confidential basis," White told Smith. "We do so in order to protect the integrity of our investigations, safeguard the privacy of witnesses, and avoid damaging the reputations of parties who may not be charged."

Smith, a Texas Republican who has served 29 years in the House, set his sights on the SEC while continuing his contentious investigation into the attorneys general of New York and Massachusetts over their probes of Exxon, although that stalemate shows signs of softening.

Representatives for Maura Healey of Massachusetts and Eric Schneiderman of New York have held meetings with bipartisan committee staff to discuss the subpoenas that their offices have refused to comply with and asked that they be withdrawn.

The meetings followed a largely partisan hearing last month in which Smith and the Republican majority of the science committee heard testimony from three witnesses who bolstered Smith's contention that the subpoenas were justified.

Following one meeting, attorneys from Healey's office followed up with a letter to Smith to explain the foundation of the state's investigation.

"Our present investigation is based on apparent inconsistencies between what Exxon scientists told Exxon management about the expected impact of fossil fuels on climate and what Exxon told (or failed to tell) investors and consumers," according to the letter.

Any such inconsistencies could constitute unfair and deceptive business practices under Massachusetts laws, Healey's staff explained. The laws are designed to protect investors and consumers from misrepresentations by businesses or failures to disclose material facts that may have led the investors and or consumers to make different purchasing choices.

"If the evidence from the Attorney General's investigation shows that Exxon was not forthcoming in its statements about what it knew about the impact of fossil fuels on climate and the impact of prospective climate change and efforts to deal with it on Exxon's future business and assets, then the Attorney General would evaluate civil claims for violations of the statute as to investors and consumers," the letter said.

Although Smith has not responded to the letter, the attorneys general have left open the door for further talks.

Meanwhile, a federal judge in Texas ruled Thursday that Healey will have to present evidence that she wasn't biased in launching her Exxon investigation if she wants to continue her probe.

Exxon had filed suit to stop Healey, saying it was fueled in part by preconceived notions that the company was guilty.

U.S. District Judge Ed Kinkeade said he was troubled by statements made by Healey during a news conference in April.

The company argued that Healey's remarks at the press conference called by Schneiderman to announce a coalition of prosecutors—AGs United for Clean Power—formed to pursue investigations of Exxon and fossil fuel companies over climate change matters showed her prejudice against the company.

"During Attorney General Healey's speech, she stated that 'fossil fuel companies that deceived investors and consumers about the dangers of climate change should be, must be, held accountable,'" according to a section of the order.

"Attorney General Healey then went on to state that, 'that's why I, too, have joined in investigating the practices of ExxonMobil.'"

Healey argued in court that she opened her investigation to determine whether Exxon had committed consumer and securities fraud.

Yet Kinkeade issued a discovery order that will allow Exxon to delve deeper into Healey's motivation by allowing the company to seek internal records detailing the foundation of the Massachusetts investigation.

"The Court finds the allegations about Attorney General Healey and the anticipatory nature of Attorney General Healey's remarks about the outcome of the Exxon investigation to be concerning to this Court," according to Kinkeade's written order. "The foregoing allegations about Attorney General Healey, if true, may constitute bad faith."

A spokeswoman for Healey said the attorney general will fight for the right to press ahead.

"Consumers and investors have a right to understand what Exxon knew about the impact of fossil fuels and when," said Jillian Fennimore, Healey's spokeswoman. "Despite its claims, Exxon is subject to the laws of our state and is accountable for any misrepresentations it may have made."

The judge postponed his ruling on Exxon's bid to derail Healey's investigation until he sees the additional documents he demanded in his order.

Smith's contention that the state investigations are politically motivated will not likely be as convincing in his pursuit of the SEC, a non-partisan agency that intentionally steers wide of politics.

The SEC requires companies like Exxon to disclose any potential decrease in demand for products that produce significant greenhouse gas emissions because it could pose a material risk to investors.

Democratic members of the House Oversight and Government Reform Committee asked the SEC in October to open an investigation to determine if Exxon violated securities laws by failing to disclose those risks.

The request signed by four committee members, including California Reps. Ted Lieu and Mark DeSaulnier, cited news reports in InsideClimate News and those later published by the Los Angeles Times that Exxon embarked on a campaign of denial and disinformation after company scientists connected the burning of fossil fuels with global warming.

loss:

https://insideclimatenews.org/news/14102016/sec-refuses-comply-lamar-smith-subpeona-over-exxon-probe-mary-jo-white

https://insideclimatenews.org/news/29092016/lamar-smith-extends-exxon-subpoena-climate-investigations-new-york-massachusetts-sec

===

http://www.ecowatch.com/sec-exxon-climate-change-2011247494.html

...

The SEC requested information and documents from Exxon and the company's auditor, PricewaterhouseCoopers, in August, as well as documents from New York Attorney General Eric Schneiderman's similar investigation of the company. Exxon has been under increasing government scrutiny since multiple reports revealed the oil giant may have misled the public about the dangers of climate change.

"This is a remarkably important development—the federal government is joining the courageous state attorneys general, and they're all following the trail of clues that began with powerful investigative journalism," Bill McKibben, 350.org co-founder, said. "Before they're done we'll understand considerably more about how the world overheated—but in the meantime, every institution that invests in Exxon should take real note of who you're keeping company with."

img

"This investigation is a welcome opportunity for transparency from the fossil fuel industry,"Greenpeace Executive Director Annie Leonard said. "We know Exxon has published projections showing that demand for oil and natural gas will continue growing for decades to come—projections which are flatly incompatible with limiting global warming to 2 degrees Celsius, as called for by the Paris climate accords. What we don't know is how Exxon's balance sheet would change if the world meets the climate challenge."

For a deeper dive:

News:Wall Street Journal, CNBC, ThinkProgress, USA Today, Reuters, Bloomberg, New York Times,CNN Money, Financial Times, Houston Chronicle, Huffington Post, Politico Pro, Grist, Wired

https://www.propublica.org/article/why-havent-bankers-been-punished-just-read-these-insider-sec-emails

story was co-published with The New Yorker. It is not subject to our Creative Commons license.

In the late summer of 2009, lawyers at the Securities and Exchange Commission were preparing to bring charges in what they expected would be their first big crackdown coming out of the financial crisis. The investigators had been looking into Goldman Sachs’ mortgage-securities business, and were preparing to take on the bank over a complex deal, known as Abacus, that it had arranged with a hedge fund. They believed that Goldman had committed securities violations in developing Abacus, and were ready to charge the firm.

James Kidney, a longtime SEC lawyer, was assigned to take the completed investigation and bring the case to trial. Right away, something seemed amiss. He thought that the staff had assembled enough evidence to support charging individuals. At the very least, he felt, the agency should continue to investigate more senior executives at Goldman and John Paulson & Co., the hedge fund run by John Paulson that made about a billion dollars from the Abacus deal. In his view, the SEC staff was more worried about the effect the case would have on Wall Street executives, a fear that deepened when he read an email from Reid Muoio, the head of the SEC’s team looking into complex mortgage securities. Muoio, who had worked at the agency for years, told colleagues that he had seen the “devasting [sic] impact our little ol’ civil actions reap on real people more often than I care to remember. It is the least favorite part of the job. Most of our civil defendants are good people who have done one bad thing.” This attitude agitated Kidney, and he felt that it held his agency back from pursuing the people who made the decisions that led to the financial collapse.

While the SEC, as well as federal prosecutors, eventually wrenched billions of dollars from the big banks, a vexing question remains: Why did no top bankers go to prison? Some have pointed out that statutes weren’t strong enough in some areas and resources were scarce, and while there is truth in those arguments, subtler reasons were also at play. During a year spent researching for a book on this subject, I’ve come across case after case in which regulators were reluctant to use the laws and resources available to them. Members of the public don’t have a full sense of the issue because they rarely get to see how such decisions are made inside government agencies.

Kidney was on the inside at a crucial moment. Now retired after decades of service to the SEC, Kidney recently provided me with a cache of internal documents and emails about the Abacus investigation. The agency holds the case up as a success, and in some ways it was: Goldman had to pay a $550 million fine, and a low-ranking trader was found liable for violating securities laws. But the documents provided by Kidney show that SEC officials considered and rejected a much broader case against Goldman and John Paulson & Co.

Kidney has criticized the SEC publicly in the past, and the agency’s handling of the Abacus case has been previously described, most thoroughly in a piece by Susan Beck, in The American Lawyer, but the documents provided by Kidney offer new details about how the SEC handled its case against Goldman. The SEC declined to comment on the emails or the Abacus investigation, citing its policies not to comment on individual probes. In a recent interview with me, Muoio stood by the agency’s investigation and its case. “Results matter. It was a clear win against a company and culpable individual. We put it to a jury and won,” he said.

Kidney, for his part, came to believe that the big banks had “captured” his agency — that is, that the SEC, which is charged with keeping financial institutions in line, had become overly cautious to the point of cowardice....

...

exxon bustedby ICN AG

The day would only get worse for the multinational energy firm, as the Securities and Exchange Commission ordered a vote on a shareholder resolution that would require the firm to disclose how climate change—or regulations meant to combat it—would impact the stability of the company’s finances.

Govt securities watchdog orders ExxonMobil shareholder vote on #climate data https://t.co/KfS425w05d #ExxonKnew #divest

— climatehawk1 (@climatehawk1) March 24, 2016

The SEC’s move comes just weeks after an investigation by the Government Accountability Project, which revealed that, for years, Exxon had lied to the SEC in its 10-K filings.

“Exxon has done a masterful job of hedging its bets, both by omission and commission: omitting mere mention for many years, and then grossly understating, the vast array of direct and indirect risks it faces as a result of climate change,” said Climate Science & Policy Watch, a GAP program that promotes governmental integrity in the use of climate science. “Even worse, Exxon has overtly and flagrantly overstated possible financial and economic risks associated with regulating carbon and other GHGs, both here in the U.S. and in nations around the world."

http://www.alternet.org/environment/rockefeller-family-fund-divest-exxonmobil-says-oil-giant-morally-reprehensible

http://www.globalpossibilities.org/sec-chair-seeks-to-oust-regulator-who-regulated-auditing-firms/

https://en.wikipedia.org/wiki/U.S._Securities_and_Exchange_Commission

The U.S. Securities and Exchange Commission (SEC) is an agency of the United States federal government. It holds primary responsibility for enforcing the federalsecurities laws, proposing securities rules, and regulating the securities industry, the nation's stock and options exchanges, and other activities and organizations, including the electronic securities markets in the United States.^[2]

In addition to the Securities Exchange Act of 1934, which created it, the SEC enforces the Securities Act of 1933, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Sarbanes–Oxley Act of 2002, and other statutes. The SEC was created by Section 4 of the Securities Exchange Act of 1934 (now codified as 15 U.S.C. § 78d and commonly referred to as the Exchange Act or the 1934 Act).

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the culturegeist

Saturday, July 11, 2015

Keir Gumbs - The SEC Door Keeps Revolving

SEC candidate Keir Gumbs

The mainstream and social media attention focused recently on two high profile African-American lawyers and the troubling ethical issues surrounding the revolving door that exists between the Securities & Exchange Commission, Department of Justice, the Treasury Department and the private sector have been on my mind this week.

Last Wednesday I blogged about the news that former Attorney General Eric Holder is taking a high-paid position with his former law firm Covington & Burling.

Now it's not exactly front-page news but there's a lot of political maneuvering going on regarding the possible appointment of Covington & Burling corporate attorney Keir Gumbs to replace outgoing Democrat Luis Aguilar on the SEC.

This morning I got an e-mail from Democracy For America regarding the joint pressure being applied to the Obama administration from The Wall Street Journal, the financial industry and some of the Congressional Republicans who want Gumbs appointed to the SEC, and are also actively seeking to block any appointees backed by progressive Democratic Senator Elizabeth Warren.

A recent Wall Street Journal editorial went so far as to accuse Warren of leading an "effort to pack the SEC with anti-business activists"- which is the kind of editorial tone one can expect given that Rupert Murdoch now owns the WSJ.

Senator Elizabeth Warren terrifies Wall Street

That characterization strikes me as just a bit melodramatic considering that she's on record as trying to protect the interests of the majority of the American people whose savings, mortgages, salaries and jobs were all deeply affected by the Great Recession.

We now know the GR was brought on by a toxic combination of lack of regulatory government oversight (including the SEC), and the unchecked greed of the nation's "too big to fail" banks and Wall Street firms whose complex high-risk gambles on mortgage-backed securities caused the unraveling of our financial system in the first place.

Considering the fragility of our still-recovering economy, common sense suggests the American people need some balance on the SEC to ensure that strong regulatory oversight is in place to ensure that the nation's financial institutions don't tank the economy again just make a few bucks for the 1%.

Such oversight is both reasonable and fair; not "anti-business".

Reporter Owen Davis wrote a really informative article on the International Business Times Website back on June 15th titled, "Revolving Door Concerns Surround Potential SEC Nominee Keir Gumbs" that offers some detailed insight into how corporate attorney Keir Gumbs' has actively lobbied on behalf an array of large corporations over the course of his impressive career.

As Davis notes in his article, The Intercept was the first to report about some specific ways that Gumbs helped Covington & Burling's Fortune 500 corporate clients find ways to avoid public scrutiny of their political donations to the array of secret "dark money" 501(c)(4) and 501(c)(6) organizations that funneled over $300 million into the 2012 presidential campaign; and thanks to the SCOTUS decision in Citizens United, even more of that dark money will flow into the 2016 race.

I've got nothing against Keir Gumbs personally or anything, but is the SEC really the place for a corporate attorney who conducted seminars for corporations on how to keep the public from knowing how much money they pour into the political process?

Davis' article also reports that when the American Petroleum Institute (a national trade association that's represented US oil and natural gas interests since World War I) met with SEC officials to establish anti-corruption rules on the open disclosure of payments to foreign governments, guess who represented A.P.I?

Gumbs.

Those disclosure rules will be finalized in 2016 - after the two new SEC appointees have begun their tenures and it doesn't take a genius to figure out how Gumbs will vote on that or whose interests he'll have in mind when he does.

In some ways I suppose the fact that Republicans are lobbying for an African-American corporate attorney to be nominated to the SEC by President Obama can be seen as positive in terms of diversity within the ranks of both the upper echelons of corporate law and on the SEC itself.

Based on what I've read of Gumbs' track record as an attorney there's no doubt he's qualified for the position, after all he was a legal adviser to the SEC back in 1999 and by the time he left the SEC to join Covington & Burling in 2005, he was an adviser to Roel Campos (pictured left).

Campos was the SEC commissioner appointed by George W. Bush who left to (drum roll please...) join a private practice.

He was later one of a group of former SEC officials who sent a letter to the Financial Stability Oversight Council in February 2013 advising the FSOC members to "back down from its efforts to pressure the SEC into adopting new rules for the $2.6 trillion money market fund industry" according to a Reuters article written by Sarah Lynch.

But my concern with Gumbs is more about how his insider influence on the regulatory power over the SEC to keep the big banks and Wall Street in check will affect the long-term economic interests of the American people as a whole.

And I'm certainly not alone in that, tens of thousands of concerned American citizens have already signed petitions calling for President Obama to nominate strong regulators to the two SEC positions that must be filled.

Current SEC Chair Mary Jo White

Even if Gumbs gets the nomination, Democrats will still have a 3-2 advantage on the SEC, but the current SEC Chair Mary Jo White has also been the target of criticisms of conflict of interest for her record as corporate lawyer for the law firm of Debevoise & Plimpton - who like Covington & Burling, represents a Who's Who of Wall Street clients.

In addition to ex-Attorney General Eric Holder, Covington & Burling also has former members of the Treasury Department and Department of Justice on it's roster - including the former head the DOJ's Criminal Division, Lanny Breuer.

Regardless, my political "Spidey Sense" tingles whenever members of the same Republican party that actively works to suppress the voting rights of racial minorities supports a black guy for anything.

Whether Keir Gumbs gets nominated to the SEC or not, the larger issue of the ongoing revolving door policy that shuttles corporate insiders back and forth between private firms and positions within agencies of the federal government responsible for the oversight of their former clients will continue to cast a shadow on the ethics of the American political system.

And the "Democracy" we so often criticize other nations for suppressing

http://theculturegeist.blogspot.com/2015/07/keir-gumbs-sec-door-keeps-revolving.html

interview with Democracy Now!, Rolling Stone journalist Matt Taibbi talked about former U.S. Attorney General Eric Holder rejoining his old law firm whose clients include many of the banks linked to the finanicial crisis. Taibbi described the move as probably the biggest single example of the revolving door. "He spent six years essentially guiding all of these Wall Street firms," he said, "which many of them are clients of this company that he’s now working for—he guided them all back to profitability. He allowed bankers to escape prosecution. And now he’s going right back to that firm, where he’s going to enjoy a very lucrative partnership, whether he ever works again, you know, for the rest of his life."

Below is an interview with Taibbi, followed by a transcript:

JUAN GONZÁLEZ: We turn now to the latest sign of the revolving door between Wall Street and Washington. Recently retired U.S. Attorney General Eric Holder is returning home—to the corporate law firm Covington & Burling, where he worked for eight years before becoming head of the Justice Department. During his time at Covington, Holder’s clients included UBS and the fruit giant Chiquita. The law firm’s client list has included many of the big banks that the Justice Department under Holder’s leadership failed to criminally prosecute for their role in the financial crisis, including Bank of America, JPMorgan Chase, Wells Fargo and Citigroup.

AMY GOODMAN: In a new interview with The National Law Journal, Eric Holder said his, quote, "appropriately aggressive," unquote, challenges to financial and corporate fraud could mean certain institutions "might not want to work with me," he said, "and ... that’s fine," unquote. However, in 2013, Holder testified before the Senate Judiciary Committee and suggested some banks are too big to jail.

ATTORNEY GENERAL ERIC HOLDER: I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy. And I think that is a function of the fact that some of these institutions have become too large. Again, I’m not talking about HSBC; this is just a more general comment. I think it has an inhibiting influence—impact on our ability to bring resolutions that I think would be more appropriate.

AMY GOODMAN: Well, for more, we’re joined by Matt Taibbi, award-winning journalist with Rolling Stone magazine, who writes about Eric Holder’s time at Covington & Burling and much more in his book, The Divide: American Injustice in the Age of the Wealth Gap, which is now out in paperback.

AMY GOODMAN: So you were tweeting up a storm yesterday as this news came of the former attorney general, Eric Holder, going back to Covington & Burling. Talk about the significance of this.

MATT TAIBBI: Yeah, I mean, I think this is probably the single biggest example of the revolving door that we’ve ever had. And we’ve had some whoppers in our past. I think previously the worst one was probably Louisiana Congressman Billy Tauzin leaving Congress and taking a $2-million-a-year job with PhRMA, right after he helped pass the prescription drug benefit bill. But what Holder just did just blows Tauzin away. I mean, he spent six years essentially guiding all of these Wall Street firms, which many of them are clients of this company that he’s now working for—he guided them all back to profitability. He allowed bankers to escape prosecution. And now he’s going right back to that firm, where he’s going to enjoy a very lucrative partnership, whether he ever works again, you know, for the rest of his life.

JUAN GONZÁLEZ: Well, Holder also sort of became a point person for these, quote, "extrajudicial settlements."

JUAN GONZÁLEZ: Could you explain what those are and how they worked?

MATT TAIBBI: Yeah, Holder, in general, pioneered a number of different ways that essentially a lot of these too-big-to-fail companies were allowed to buy their way out of trouble. And one of the most notorious, I think, was that he concluded a number of the biggest settlement deals with banks like JPMorgan Chase in ways that were not reviewed by a judge. Because we did have some instances during this time period where pesky judges—I think one of the most infamous, in the eyes of Wall Street, was Jed Rakoff, who threw out a settlement with Citigroup because he thought it wasn’t harsh enough—well, to fix that problem, Holder just started striking deals and not submitting them for judicial review. So he did a $13 billion settlement with JPMorgan Chase where no judge signed off on the deal. The whole thing was done in secret. He essentially institutionalized the back room. This was just a deal where a bunch of bankers got together with a bunch of Justice Department officials, money changed hands, and that was it. The whole—all of their criminal problems went away. This is a very different way of doing business than what we’ve ever seen before, and it’s very dangerous, I think.

JUAN GONZÁLEZ: And he also took the term "collateral damage" into the financial world out of the military world, didn’t he, as well?

MATT TAIBBI: Right, yeah. He actually predated the collateral damage idea back when he was a lawyer in the Clinton Justice Department. He wrote a memo that—you know, it’s now known as the Holder Memo, where he outlined a policy that is called "collateral consequences," and basically all this says is that if you’re a prosecutor and you’re worried about prosecuting a company that employs a lot of people and you’re concerned that innocent people might suffer as the result of a prosecution, you may pursue noncriminal remedies when you go after this company.

The problem was that when—by the time he became attorney general, the economic landscape was dotted all over with these enormous, too-big-to-fail companies, and there was a real threat that if you prosecuted these firms, that it might cause serious damage to the overall economy. Obviously we saw what happened with Lehman Brothers, for instance. So this became sort of the unofficial policy of the United States. We started taking companies that had done very bad things—you know, HSBC is probably the biggest example, laundering money for drug dealers—and instead of throwing people in jail and extracting huge individual penalties from the guilty parties, we just got the banks to pony up a big fine that shareholders paid, and they got to stay in business.

AMY GOODMAN: As you were tweeting your criticism yesterday, a lot of Obama supporters were also on social media pushing the line that Holder did not send anyone to jail because there were no laws broken.

MATT TAIBBI: Right, yeah, and this is—this comes, I think, directly from something that Barack Obama himself said on 60 Minutes once. He said some of the worst behavior on Wall Street was not illegal, some of the least ethical behavior was not illegal. But he crafted that phrase very carefully. He didn’t say all of it was not illegal. He said some of the worst behavior, and that’s true. But some of it was very illegal.

And again, just to go back to some of the worst cases, HSBC admitted to laundering $880 million for a pair of Central and South American drug cartels, including the Sinaloa drug cartel, which is infamous all over the world for these torture videos. So, we have HSBC, Europe’s largest bank, is washing hundreds of millions of dollars for people who chop people’s heads off with chainsaws. That’s a crime. I mean, there’s no—that’s the worst crime that a bank can possibly commit. And anybody who thinks that Holder didn’t send people to jail because they didn’t commit crimes is not really paying attention to what went on during this time.

AMY GOODMAN: Also at Covington & Burling, Eric Holder will be reunited with Lanny Breuer. Explain who he was and the significance of them together.

MATT TAIBBI: Well, Lanny Breuerworked at Covington & Burling along with Eric Holder. He went to Holder to become his deputy for the early part of his tenure as attorney general. He was the head of the Criminal Division. Lanny, from the sources that I spoke to while I was researching all this material, was terrified of going to court when he didn’t have an absolute, guaranteed, sure victory. And so, what happened very early in their tenure together was that they did take one case to trial. They went to trial against a pair of guys from Bear Stearns who were accused of defrauding their clients. And they lost. It ended in an acquittal, even though they had very solid documentary evidence. From that point forward, they didn’t take anybody to court. And all of these cases involving all of these banks, they went the settlement route instead, presumably because they were afraid of going into a courtroom. They were worried that juries didn’t understand this material. They were worried that it was too complicated. And so, rather than risk losing and getting a bad headline, they let off all of these people who had done very, very bad things, and so we have this legacy of cash instead of punishment.

JUAN GONZÁLEZ: Can you talk also about how the Justice Department and other regulatory groups have changed the composition of the staffing, the high-level staffing, of these agencies during this period when Holder has been there?

MATT TAIBBI: Yeah. This is something that I heard over and over again over the years, which is that a certain kind of person who used to work in the regulatory agencies, you know, who was a kind of a career civil servant, particularly the law enforcement types, the people who grew up through the ranks, you know, just trying to get the criminal at all costs—they’re primarily motivated by trying to extract justice from wrongdoers—that kind of person is gradually disappearing from the ranks of the regulatory bodies, and they are being replaced, increasingly, particularly at the higher levels, by people from the corporate defense community. And Holder was very profoundly a symbol of that kind of person.

And the difference was, when you have people who come from the corporate defense world, like Holder, like Lanny Breuer, they tend to approach these settlements not to get a pound of flesh out of the wrongdoers, but instead they want to emerge with a settlement that leaves everybody happy when they walk out of the room. But that’s really not a good approach to fighting crime. That’s not the kind of attitude you want in your top crime fighter in the country. And as a result, that’s how we got so many of these settlements, which, again, were concluded in secret, in the back room. And people like Jamie Dimon were walking out of these settlements, saying, "Well, this wasn’t so bad." And their share price would go up the day after these settlements were concluded. That’s really not what we want from the top cop in the country.

AMY GOODMAN: And this goes to the central theme of your book, Matt Taibbi, The Divide: American Injustice in the Age of the Wealth Gap. I mean, Attorney General Eric Holder was hailed as a great civil rights hero. After Ferguson, he actually went to Ferguson. I was in the Selma church on the 50th anniversary of the Selma march just a few months ago, when he gave a powerful speech about young black men—his own son, Eric Holder III, in the front row—being killed, and kept repeating that. It reminds me of Reverend Barber in North Carolina, head of the NAACP, who, after Dylann Roof was arrested, the alleged shooter in the Charleston church, said, "The perpetrator has been arrested, but the killer is still at large." And he was talking, overall, about the system, beyond the Confederate flag, what it represents—for example, mass incarceration—and how these things have to change.

AMY GOODMAN: So talk about what this means—on the one hand, a civil rights crusader, but when it comes to issues of who gets put in prison and who remains free, where Eric Holder has stood.

MATT TAIBBI: Yeah, I mean, to be fair, Eric Holder, you know, has talked a lot about reform of prison sentencing, and according to their statistics, incarceration has actually declined under the Obama administration for the first time in I don’t know how many years—forever. But still we have these enormous problems, like the story that you reported on in the beginning of this show. You have people who are in jail for not just for months, but years at a time, awaiting trial because they can’t afford bail. We have millions of people behind bars for crimes that are far less serious than what HSBC, for instance, was doing. And there’s this enormous dichotomy.

I think, you know, this is the—the chief problem with what Holder did is that there are all of these people who are in jail for crimes because it’s easy to put away people who don’t have enough money to defend themselves, who can’t pay enormous fines. Those are the people who end up going behind bars for crimes like money laundering or drug dealing or whatever it is. But we have this rationale for companies like HSBC or JPMorgan Chase or Credit Suisse or BNP Paribas, that are caught with doing tax evasion or money laundering or fraud or whatever it is, that somehow this class of defendants, we can allow them to pay their way out of trouble, while this other group of people has to go behind bars. And we just can’t have that. I mean, that system is totally inappropriate. And as much as Holder wants to hold himself out as a civil rights leader, and has done some good things, this dichotomy is really his legacy, and that’s an enormous problem.

JUAN GONZÁLEZ: And the issue of him returning to Covington & Burling, could you talk about that particular law firm, its role in the Washington scene? And also, what are the limitations on appointed officials, in terms of once they leave office what they can or can’t do, or did the Obama administration institute particular restrictions on their appointees?

MATT TAIBBI: They did. There is a two-year cooling-off period, they call it, where, you know, someone who leaves the Justice Department has to wait for two years before they can interact with the Justice Department again. This means that even though Eric Holder has gone back to work, he has to sit for 19 months during this cooling-off period and do I don’t know what. I’m sure he’s going to be compensated very handsomely during that time.

JUAN GONZÁLEZ: But he can advise the lawyers that do the direct interaction.

MATT TAIBBI: Exactly, yeah. They’ll figure out some way to do it so that it’s, you know, superficially legal. But there is this cooling-off period. Covington & Burling, what its significance is, it’s one of the biggest white-collar defense firms in America. It is notable because it has such a lengthy list of too-big-to-fail banks among its clientele. It also, very interestingly, played a very important role in helping to create the subprime mortgage crisis, because it represented a company called MERS, which was the electronic mortgage registry system, which helped create a lot of the confusion and chaos in the paperwork area of the mortgage system. All these people who were trying to find out who owns their home and can’t find the note, a lot of that is chalked up to the work that MERS did to eliminate paper mortgages. So they had an enormous role in helping create this subprime mortgage market. And then, of course, Eric Holder goes, and he’s the regulator for all that activity, you know, as the attorney general. It was a little weird, to say the least.

AMY GOODMAN: Can you talk about Keir Gumbs?

AMY GOODMAN: —the man that Senator Warren has been protesting, would be put—

MATT TAIBBI: Right, who’s going to be—who’s going to be on the SEC now, yeah. I mean, this is a—they’re putting him—he’s going to be an SEC commissioner, presumably. Covington & Burling is becoming essentially a kind of shadow Justice Department now. We have six alums from the Justice Department who have just returned to Covington & Burling, and now Covington & Burling is sending another person to occupy a very high-ranking seat in the SEC. You know, it’s problematic, clearly, when you have so many people from the same firm who are all going to be talking to each other. It’s kind of this secondary club. And what happens when all these people have this congenial relationship, they end up making deals that are much more favorable to their clients than they would be otherwise.

JUAN GONZÁLEZ: Well, they can all regulate all of the Goldman Sachs alums that are in other agencies in the federal government.

AMY GOODMAN: I mean, the significance of Gumbs, yes, coming from Covington & Burling, but also representing American Petroleum, he and colleagues at the firm writing a guide advising corporations on how to avoid disclosing their political spending to shareholders, Senator Warren wanting the SEC to require companies to disclose that kind of spending. And the question is: Will President Obama respond to Senator Warren’s pressure?

MATT TAIBBI: Probably not, I’m guessing. You know, I mean, but this—it says a lot that this is the kind of person that they’re going to be bringing in to the SEC. And I think, you know, again, people want a different kind of person occupying these regulatory positions. They don’t want a corporate defense attorney who’s just spent however many years telling companies how to avoid punishment, how to avoid taxes, how to avoid all these problems. You know, I personally would much prefer to have a career investigator, career law enforcement official in that job.

AMY GOODMAN: Well, we want to thank you, Matt Taibbi, award-winning journalist with Rolling Stone magazine. His most recent book, The Divide: American Injustice in the Age of the Wealth Gap, now out in paperback.

Keir D. Gumbs is a partner in Washington, DC and vice chair of the Securities and Capital Markets Practice Group. He advises public and private companies, non-profit organizations, institutional investors and other clients in corporate, corporate governance, securities regulation, and transactional matters.

Before joining Covington, Mr. Gumbs' spent six years at the SEC, where he last served as counsel to an SEC Commissioner. Prior to that role, Mr. Gumbs served as a Special Counsel in the Office of Chief Counsel in the SEC’s Division of Corporation Finance. In the Office of Chief Counsel, Mr. Gumbs worked on the taskforce for shareholder proposals for three years, including two years where he lead or co-lead the taskforce. He also advised companies and investors with respect to a variety of other matters arising under federal securities law with an emphasis on corporate finance issues under the Securities Act of 1933, reporting obligations under the Securities Exchange Act of 1934, the proxy rules, corporate governance developments and SEC enforcement actions.

Representative Matters

Advises Fortune 500 companies with respect to SEC periodic reports; proxy statements; beneficial ownership reports; committee charters; board and committee meeting calendars; codes of ethics; corporate governance guidelines; disclosure controls and procedures; internal control over financial reporting; CEO/CFO certifications under the Sarbanes-Oxley Act and related matters.

Regularly assists clients with respect to transactional matters, including initial public offerings, spin-offs, tender offers, mergers and acquisitions, share repurchase programs and stock buybacks, debt exchange offers, and similar matters. Recent transactions include representing Salix Pharmaceuticals Ltd. in its $2.6 billion acquisition of Santarus Inc. and Telular Corporation in its $250 million acquisition by Avista Partners.

Part of a developing crowdfunding and micro-lending practice at Covington. Represents Prosper Marketplace, Inc., named by the Wall Street Journal as one of the top 50 venture-capital-backed companies, in ongoing securities disclosure and reporting matters, including the registration of an ongoing offering of $500 million in “borrower-dependent notes."

Advises companies and institutional investors on a range of corporate governance matters, with a focus on shareholder proposals and other forms of shareholder activism.

Previous Experience

U.S. Securities and Exchange Commission, Counsel to Commissioner Roel C. Campos (2004-2005)

U.S. Securities and Exchange Commission, Division of Corporation Finance, Office of Chief Counsel, Special Counsel (2001-2004)

U.S. Securities and Exchange Commission, Division of Corporation Finance, Attorney-Adviser (1999-2001)

Honors and Rankings

Savoy Magazine, "Most Influential Black Lawyers" (2015)

Whos Who Legal, Corporate – M&A and Governance (2015)

National Law Journal, "D.C. Rising Star" (2014)

Washington DC Super Lawyers, Securities & Corporate Finance (2014-2015)

Selected as one of the "Trailblazers Under 40" by the National Bar Association (2014)

Chambers USA - America's Leading Business Lawyers, Securities: Regulation: Advisory (2012-2015)

Named a “2011 Rising Star of Corporate Governance” by the Millstein Center for Corporate Governance and Performance at the Yale School of Management

Selected as one of the "People to Watch" in the National Association of Corporate Directors 2011 and 2012 “Directorship 100,” a list of the most influential people in corporate governance and the boardroom.

Memberships and Affiliations

Board Member, The Society of Corporate Secretaries and Governance Professionals

National Investor Relations Institute

Board of Advisers, Institute for Law and Economics at the University of Pennsylvania Law School

Publications and Speeches

Mr. Gumbs was quoted in the Law360 article titled “Fitbit's IPO Is An Exercise In Disclosing Data Risks” (5/27/2015).

Publications

"SEC Proposes Rules on Clawback Policies," Covington Alert (7/6/2015), Co-Author

"SEC Proposes 'Pay for Performance' Disclosure Rule," Covington E-Alert (5/1/2015), Co-Author

"Responding to Corporate Political Disclosure Initiatives: Guide for In-House Counsel," The Corporate Governance Advisor (March/April 2015), Co-Author

"Recent Federal Securities Regulatory and Other Developments," Covington E-Alert (3/27/2015), Co-Author

"Responding to Corporate Political Disclosure Initiatives," The Harvard Law School Forum on Corporate Governance and Financial Regulation (1/30/2015), Co-Author

"Reminders for the 2015 Proxy Season," Covington Advisory (11/10/2014), Co-Author

"Using the Courts to Resolve Shareholder Proposal Disputes," Insights (April 2014), Co-Author

"Conflict Minerals Reporting Deadline Nears: Update and Frequently Asked Questions," Covington Advisory (1/31/2014), Co-Author

"SEC Proposes Rules for Crowdfunding," Covington Advisory (10/30/2013), Co-Author

"Debunking the Myths Behind Voting Instruction Forms and Vote Reporting," The Corporate Governance Advisor (July/August 2013), Co-Author

"STOCK Act Opens Up New Front for Insider Trading Cases," Covington E-Alert (5/16/2013), Co-Author

"SEC Endorses Social Media as Public Disclosure Channel," Covington E-Alert (4/3/2013), Co-Author

"Rule 10b5-1 Trading Plans: Avoiding the Heat," Bloomberg BNA Securities Regulation & Law Report (3/11/2013), Co-Author

"Conflict Mineral Rules: Frequently Asked Questions," Covington Advisory (1/3/2013), Co-Author

"Shareholder Proposals," BNA Corporate: Practice Series Portfolio No. 83-3rd (2013), Co-Author

"SEC Adopts Resource Extraction Payment Rules," Covington Advisory (8/29/2012), Co-Author

"The Best Practices Working Group for Online Shareholder Participation in Annual Meetings," VSM Best Practices Working Group (June 2012), Co-Author

"The JOBS Act: New Rules for Emerging Growth Companies, Private Placements and "Crowdfunding"," Covington Advisory (4/2/2012), Co-Author

"Board Oversight of Risk Management and Crisis Preparedness," Insights (March 2012), Co-Author

"SEC Guidance on Disclosure Related To Cybersecurity," Covington Advisory (10/17/2011), Co-Author

"Shareholder Communication and Voting: Shedding Light on the NOBO-OBO Classification System," The Corporate Governance Advisor (September/October 2010), Co-Author

"Shareholder Proposals," BNA Corporate: Practice Series Portfolio No. 83-2nd (2009), Co-Author

"Shareholder Proposals (Chapter)," A Practical Guide to SEC Proxy and Compensation Rules, Fourth Edition (2007), Co-Author

Presentations and Speeches

"Legal Considerations," Crowdfinance 2014 Redefining Wall Street (10/16/2014)

"Practical Guidance in a Changing Environment," PLI's Securities Filings 2014 (9/4/2014)

"Roundtable on the Shareholder Proposal Process," Presentation to the Council of Institutional Investors (7/9/2014)

"Frequently Asked Questions," Securities Regulation Institute (6/28/2014)

"2014 Proxy Season Overview," American Stock Transfer Co. Webinar (4/24/2014)

"Future of Proxy Regulation," Society of Corporate Secretaries (2/27/2014)

"What to Expect in Investor Relations in 2014," NYSE Euronext Webcast (2/25/2014)

"Corporate Political Spending Overview," Corporate Political Activity and Government Affairs Compliance Conference (2/6/2014)

"Dealing With the Proxy Season - A Practical Guide," PLI - Corporate Governance -- A Master Class 2014 (February 2014)

"Things I Wish I’d Known Panel," Securities Regulation Institute (1/29/2014)

wikifluff

Richard C. Breeden (born December 6, 1949) is a former Chairman of the U.S. Securities and Exchange Commission, hedge fund manager, and corporate chairman.^[1]

[hide]

Early career:{:(style="margin-right:0px;margin-left:0px"):}:[edit:{]}:

Breeden began his career practicing corporate and securities law in New York City.^[2] During the administrations of Presidents Reagan, Bush (I) and Clinton, he held a series of government posts, including assistant to the President for issue analysis under President George H. W. Bush.^[3]

U.S. Securities and Exchange Commission:{:(style="margin-right:0px;margin-left:0px"):}:[edit:{]}:

From 1989 to 1993, Breeden served as Chairman of the U.S. Securities and Exchange Commission.^[4] During his tenure, Breeden's actions included:^[citation ^needed]

changing US proxy rules to create "short slate" proxy contests;
changing the rules to allow institutional investors to discuss performance problems at companies;
creating the "compensation discussion and analysis" section of the proxy;
requiring graphical presentations of share performance;
requiring disclosure of equity grants and valuation for the first time;
requiring listing of the names of compensation committee members;
broadening the scope for permissible shareholder resolutions in areas relating to compensation and governance.

Career:{:(style="margin-right:0px;margin-left:0px"):}:[edit:{]}:

For more than a decade prior to launching Breeden Partners, Breeden and his consulting firm Richard C. Breeden & Co. LLC served as advisors to companies engaged in restructurings or turnarounds of distress situations. Many of these companies experienced fraud, compliance problems or serious governance abuses, as well as prolonged performance difficulties. For example, Mr. Breeden led the turnaround of WorldCom, Inc., and he has served as the monitor of the accounting firmKPMG in its successful recovery from criminal activities involving abusive tax shelters. Prior to forming his own firm Mr. Breeden served as chairman of the worldwide financial services practice of Coopers & Lybrand.

Mr. Breeden was also highly involved with S.E.C. investigation of Hollinger International and Conrad Black in which Black was convicted in Illinois to serve 78 months in prison and pay $6.1 million to Hollinger and a fine of $125,000.^[5] Mr. Breeden is one of the named parties in a $872 million libel suit in Canada initiated by Conrad Black after the conviction.^[6]

Breeden served as non-executive Chairman of the Board of H&R Block, following a successful proxy contest in 2007 to 2011.^[7] He also serves as a director of Zale Corporation and STERIS Corp. and has previously served as a director of BBVA, SA, one of the 20 largest banks in the world. Mr. Breeden has served on approximately 15 corporate or advisory boards during his career.

In 2006 Breeden founded Breeden Partners which he is Chairman of, and its manager Breeden Capital Management. Breeden is the founding partner of Breeden Partners Europe, which was launched in December, 2008.

Personal:{:(style="margin-right:0px;margin-left:0px"):}:[edit:{]}:

Breeden was the oldest of three children and grew up in Manhattan Beach, California. He graduated from Stanford University in 1972 and received his J.D. from Harvard Law School in 1975. He currently lives inGreenwich, Connecticut with his 2nd wife, Linda H. Breeden. Breeden is the father of five sons.

References:{:(style="margin-right:0px;margin-left:0px"):}:[edit:{]}:

:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^ David Mildenberg and Yalman Onaran (November 20, 2007). "H&R Block's Mark Ernst Quits, Breeden Named Chairman". Bloomberg. Retrieved June 4, 2009.
:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^ Rudnick, Michael. "The operational optimist" The Deal Magazine, October 24, 2008. Retrieved on July 18, 2013.
:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^ Nathaniel C. Nash (May 10, 1989). "Administration Lobbies for its Savings Plan". The New York Times. Retrieved June 4, 2009.
:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^ "SEC Historical Summary of Chairman and Commissioners". U.S. Securities and Exchange Commission. Retrieved June 4, 2009.
:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^ Fabrikant, Geraldine (September 1, 2004). "Hollinger Files Stinging Report on Ex-Officials". The New York Times.
:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^ http://www.chicagobusiness.com/cgi-bin/news.pl?id=14108
:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^ Doom, Justin (2007-09-06). "H&R Block Chairman Breeden Stepping Down to Focus on Hedge Fund". Bloomberg. Retrieved 2011-03-18.

Robert Reich's Blog / By Robert Reich [1]

Robert Reich: The Disgusting Way Insider Traders Rig America and How Courts Let Them

December 18, 2014 |

A few years ago, hedge fund Level Global Investors made $54 million selling Dell Computer stock based on insider information from a Dell employee. When charged with illegal insider trading, Global Investors’ co-founder Anthony Chiasson claimed he didn’t know where the tip came from.

Chiasson argued that few traders on Wall Street ever know where the inside tips they use come from because confidential information is, in his words, the “coin of the realm in securities markets [2].”

Last week the United States Court of Appeals for the Second Circuit, which oversees federal prosecutions of Wall Street, agreed [3]. It overturned [4] Chiasson’s conviction, citing lack of evidence Chaisson received the tip directly, or knew insiders were leaking confidential information in exchange for some personal benefit.

The Securities and Exchange Act of 1934 banned insider trading but left it up to the Securities and Exchange Commission and the courts to define it. Which they have – in recent decades so broadly that confidential information is indeed the coin of the realm.

If a CEO tells his golf buddy that his company is being taken over, and his buddy makes a killing on that information, no problem. If his buddy leaks the information to a hedge-fund manager like Chiasson, and doesn’t tell Chiasson where it comes from, Chiasson can also use the information to make a bundle.

Major players on Wall Street have been making tons of money not because they’re particularly clever but because they happen to be in the realm where a lot of coins come their way.

Last year, the top twenty-five hedge fund managers took home, on average, almost one billion dollars each [5]. Even run-of-the-mill portfolio managers at large hedge funds averaged $2.2 million each.

Another person likely to be exonerated by the court’s ruling is Michael Steinberg, of the hedge fund SAC Capital Advisors, headed by Stephen A. Cohen.

In recent years several of Cohen’s lieutenants have been convicted of illegal insider trading. Last year Cohen himself had to pay a stiff penalty and close down SAC because of the charges, after making many billions.

SAC managed so much money that it handed over large commissions to bankers on Wall Street. Those banks possessed lots of inside information of potential value to SAC Capital. This generated possibilities for lucrative deals.

According to a Bloomberg Businessweek [6] story from 2003, SAC’s commissions “grease the super-powerful information machine that Cohen has built up” and “wins Cohen the clout that often makes him privy to trading and analyst information ahead of rivals.”

One analyst was quoted as saying “I call Stevie personally when I have any insight or news tidbit on a company. I know he’ll put the info to use and actually trade off it.” SAC’s credo, according to one of its former traders, was always to “get the information before anyone else.”

Insider trading has also become commonplace in corporate suites, which is one reason CEO pay has skyrocketed.

CEOs and other top executives, whose compensation includes piles of company stock, routinely use their own inside knowledge of when their companies will buy back large numbers of shares of stock from the public – thereby pumping up share prices — in order to time their own personal stock transactions.

That didn’t used to be legal. Until 1981, the Securities and Exchange Commission required companies to publicly disclose the amount and timing of their buybacks. But Ronald Reagan’s SEC removed these restrictions.

Then George W. Bush’s SEC allowed top executives, even though technically company “insiders” with knowledge of the timing of their company’s stock buybacks, to quietly cash in their stock options without public disclosure.

But now it’s normal practice. According to research by Professor William Lazonick [7] of the University of Massachusetts, between 2003 and 2012 the chief executives of the ten companies that repurchased the most stock (totaling $859 billion) received 58 percent of their total pay in stock options or stock awards.

In other words, many CEOs are making vast fortunes not because they’re good at managing their corporations but because they’re good at using insider information. It’s the coin of their realm, too.

None of this would be a problem if the only goal were economic efficiency. The faster financial markets adjust to all available information, confidential or not, the more efficient they become.

But profiting off inside information that’s not available to average investors strikes many as unfair. The “coin of the realm” on Wall Street and in corporate boardrooms is contributing to the savage inequalities of American life.

If Congress and the Securities and Exchange Commission wanted to reverse this and remove one of the largest privileges of the realm, they could. But they won’t, because those who utilize those coins also have a great deal of political power.

See more stories tagged with:

robert reich [9],

insider trading [10],

extreme inequality [11],

William Lazonick [12],

Anthony Chiasson [13],

sec [14],

ceo pay [15]

---

Source URL: http://www.alternet.org/economy/robert-reich-disgusting-way-insider-traders-rig-america-and-how-courts-let-them

2009

May 6 (Bloomberg) -- The U.S. Securities and Exchange Commission was plagued by internal conflicts before the regulator drew fire for missing Bernard Madoff’s $65 billion Ponzi scheme, a U.S. government watchdog said.

Under former SEC Chairman Christopher Cox, the agency instituted policies that slowed cases and led enforcement-unit lawyers to conclude commissioners opposed fining companies, the Government Accountability Office said in a report today. An unidentified attorney said it was “widely felt” commissioners prevented the division from “doing its job,” according to the report.

“Some investigative attorneys came to see the commission as less of an ally in bringing enforcement actions and more of a barrier,” the GAO said. Cox’s policies “contributed to an adversarial relationship between enforcement and the commission.”

The SEC failed to detect Madoff’s fraud, which dated to at least the 1980s. Mary Schapiro, who succeeded Cox in January, has tried to restore the SEC’s clout by replacing senior staff and reversing decisions made by her predecessor.

“The report will help draw the curtain down on an era and investors are better off for it,” saidJames Cox, a law professor at Duke University in Durham, North Carolina, who isn’t related to the former SEC chairman. “Enforcement’s presentations to the commission had gotten brutal and a lot of pushback was occurring.”

Clash Over Fines

When Cox became chairman in August 2005, he stepped into a partisan dispute among SEC commissioners over whether it was appropriate to sanction public companies for violating securities laws. Democratic commissioners argued that fines helped deter misconduct. Republicans countered that shareholders ultimately paid SEC penalties.

The SEC issued guidelines in January 2006, stipulating that the agency would consider how much an alleged fraud benefited the company and the impact on shareholders before imposing a fine.

Cox, now 56, set up a procedure in 2007 that required enforcement attorneys to seek approval from commissioners before negotiating corporate penalties. Previously, SEC investigators could enter into settlement talks without obtaining permission.

“The pilot program was designed to test ways to speed up cases and improve oversight, and was tried in only nine of more than 1,000 cases that were all approved by the commission,” Cox wrote yesterday in an e-mailed statement. “The GAO analysis supports the chairman’s decision to end the pilot and pursue other approaches.”

Poor Management

At the time of its review, the GAO said eight cases had been settled in accordance with the policy. A former SEC commissioner who wasn’t identified told the government watchdog that poor management caused enforcement’s failings, not policies implemented under Cox.

The enforcement division’s management and attorneys agreed that thepolicies led to “fewer and smaller” corporate fines, reduced incentives for corporations to cooperate with SEC investigations and generated a backlog of cases, the GAO said.

In fiscal 2008, the agency extracted about $1 billion of fines and illegal profits from companies and individuals after garnering $1.6 billion in 2007. Penalties exceeded $3 billion in each of the three years preceding 2007.

Schapiro, 53, in February scrapped the policy that required SEC attorneys to get authorization from commissioners before negotiating fines.

In a letter responding to the GAO’s findings, she said it sent the “wrong message to enforcement staff and to the public at a time when the SEC needs to be sending a message that corporate wrongdoing will not be tolerated.” Schapiro said she’s also examining the 2006 policy on corporate fines.

Barred From Meetings

The GAO report found that case resolutions became less transparent. During Cox’s tenure, commissioners increasingly barred enforcement personnel from meetings while considering sanctions or legal action, according to the report. The so-called executive sessions were limited either to investigators on the case or the SEC’s enforcement chief, its general counsel and secretary.

In 2008, commissioners called executive sessions on 40 percent of the days they met to vote on enforcement actions, according to the report. That is three times the rate in 2005 when Cox became chairman.

U.S. Senator Jack Reed, a Rhode Island Democrat who requested the GAO report last year, scheduled a hearing tomorrow to examine the SEC’s enforcement unit. Witnesses include SEC Enforcement Director Robert Khuzami, who took the division’s helm at the end of March.

To contact the reporters on this story: Jesse Westbrook in Washington atjwestbrook1@bloomberg.net; David Scheer in New York at dscheer@bloomberg.net.

===

huffpo

WASHINGTON —The chairman of the Securities and Exchange Commission under outgoing President George W. Bush, Christopher Cox, resigned on Tuesday as the new president took office.

The departure of Cox, an independent regulatory official whose term extends through next year, had been expected. He also relinquished his position as one of the five members of the SEC. His resignation wasn't officially announced; it was confirmed by agency spokesman John Nester.

President Barack Obama has nominated securities industry regulator Mary Schapiro to head the SEC at a time of economic crisis and shaken investor confidence that has conferred heightened importance to the position. Obama is expected to name an acting chairman until Schapiro is confirmed by the Senate and installed in the job. The acting chairman could be one of the sitting SEC commissioners.

As the financial crisis has raged, the SEC has been going through one of the most difficult times in its history _ buffeted by criticism for failing to detect signs that major Wall Street banks were in trouble before the crisis erupted last year, and for possibly lax oversight and enforcement in other areas. The scandal involving money manager Bernard Madoff brought new scrutiny on the SEC after it was revealed that agency staff repeatedly failed over the course of a decade to fully investigate credible allegations against him and to detect his alleged $50 billion fraud.

Cox, a conservative Republican congressman from California, was appointed by outgoing President Bush in mid-2005. Bush named him to the position after the surprise resignation of William Donaldson, a Wall Street veteran whom Bush had installed to help restore confidence in a stock market shaken by the wave of corporate scandals in 2002.

===

Christopher Cox was the 28th Chairman of the Securities and Exchange Commission. He was appointed by President Bush on June 2, 2005,and unanimously confirmed by the Senate on July 29, 2005. He was sworn in on August 3, 2005.

During his tenure at the SEC, Chairman Cox made vigorous enforcement of the securities laws the agency's top priority, bringing ground breaking cases against a variety of market abuses including hedge fund insider trading, stock options backdating, fraud aimed at senior citizens, municipal securities fraud, and securities scams on the Internet. He assumed leadership of the international effort to more closely integrate U.S. and overseas regulation in an era of global capital markets and international securities exchanges. He also championed transforming the SEC's system of mandated disclosure from a static, form-based approach to one that taps the power of interactive data to give investors qualitatively better information about companies, mutual funds, and investments of all kinds. In addition, as part of an overall focus on the needs of individual investors, Chairman Cox reinvigorated the agency's initiative to provide important investor information in plain English.

For 10 of his 17 years in Congress, Chairman Cox served in the Majority Leadership of the U.S. House of Representatives. He was Chairman of the House Policy Committee; Chairman of the Committee on Homeland Security; Chairman of the Select Committee on U.S. National Security; Chairman of the Select Committee on Homeland Security (the predecessor to the permanent House Committee); Chairman of the Task Force on Capital Markets; and Chairman of the Task Force on Budget Process Reform.

In addition, he served in a leadership capacity as a senior Member of every committee with jurisdiction over investor protection and U.S. capital markets, including the House Energy and Commerce Committee (as Vice Chairman of the Oversight and Investigations Subcommittee); the Financial Services Committee; the Government Reform Committee (as Vice Chairman of the full Committee); the Joint Economic Committee; and the Budget Committee.

Among the significant laws he authored were the Private Securities Litigation Reform Act, which protects investors from fraudulent lawsuits, and the Internet Tax Freedom Act, which protects Internet users from multiple and discriminatory taxation. His legislative efforts to eliminate the double tax on shareholder dividends — the subject of a thesis he authored at Harvard University in 1977 — led to the enactment in May 2003 of legislation that cut the double tax by more than half.

Chairman Cox also served as Co-Chairman of the Bipartisan Study Group on Enhancing Multilateral Export Controls, which published a unanimous report in 2001. In 1994 he was appointed by President Clinton to the Bipartisan Commission on Entitlement and Tax Reform, which published its unanimous report in 1995.

From 1986 until 1988, Chairman Cox served in the White House as Senior Associate Counsel to the President. In that capacity, he advised the President on a wide range of matters, including the nomination of three U.S. Supreme Court Justices, reform of the federal budget process, and the 1987 stock market crash.

From 1978 to 1986, he specialized in venture capital and corporate finance with the international law firm of Latham & Watkins, where he was the partner in charge of the Corporate Department in Orange County and a member of the firm's national management.

In 1982-83, Chairman Cox took a leave of absence fromLatham & Watkins to teach federal income tax at Harvard Business School. He also co-founded Context Corporation, publisher of the English translation of the Soviet Union's daily newspaper, Pravda. In 1977-78, he was law clerk to U.S. Court of Appeals Judge Herbert Choy.

In 1977, Chairman Cox simultaneously received an M.B.A. from Harvard Business School and a J.D. from Harvard Law School, where he was an Editor of the Harvard Law Review. He received a B.A. from the University of Southern California in 1973, graduating magna cum laude after pursuing an accelerated three-year course.

Chairman Cox was born October 16, 1952, in St. Paul, Minnesota. He and his wife Rebecca have three children.

http://www.sec.gov/about/commissioner/cox.htm

September 18, 2008, 8:00am EDT

S.E.C. No Evil

Christopher Cox

THE BOSS Christopher Cox, chairman of the S.E.C., in his office in February 2007.

Scot J. Paltrow

For months, Christopher Cox, the chairman of the Securities and Exchange Commission, has been under fire for a belated response to market upheavals stemming from the subprime fiasco and for being soft on big corporations. He’s eager to dispel his critics. In his 10th-floor office, with a postcard view of the Capitol, Cox appears fit and buoyant despite a recent bout with a rare cancer of the thymus gland. He denies any suggestion that he has oriented the S.E.C. away from tough enforcement and investor protection. “I spend more time on enforcement than on any aspect of my job,” he says.

But a look at his record since he became chairman in 2005 suggests that, behind the scenes, Cox has engineered a series of procedural and tactical changes, effectively reducing the S.E.C. enforcement division’s power. The division, one of four in the S.E.C., investigates and litigates violations of securities laws. Under the new rules, enforcement staffers no longer have the freedom to negotiate fines against public companies in a select group of cases. Instead, the commissioners—three Republicans and two Democrats—dictate the maximum penalty the enforcement division can seek. Since the rule was imposed, penalties have dropped. For example, in March, the commission approved a fine of $10 million against pharmaceuticals manufacturer Biovail, significantly less than the enforcement staff had sought.

At the S.E.C., which has come under fire from Congress for its apparent lack of vigilance in the subprime mess, such tensions between frontline investigators and the politically appointed commissioners to whom they report have become commonplace. Former senior enforcement officials say Cox has used his control over the commission’s calendar to delay major cases and water down others. Cox and other commissioners have shifted the agency’s focus away from strong enforcement action against big public companies and Wall Street firms, instead emphasizing what S.E.C. lawyers consider petty-fraud cases, such as small Ponzi schemes.Penalties against companies, individuals, and brokerage firms have sunk from a high of $1.5 billion in 2005 to $507 million last year.

In the coming months, the S.E.C. will be expected to sort out whether malfeasance contributed to the current economic crisis—and if so, whose. But the fundamental changes at the enforcement division will make this all the more difficult. The division has been significantly weakened by the exodus of top supervisors and is hamstrung by the new limits on its powers. Even if a new administration in the White House replaces Cox, whose term expires in 2009, it is not as though a switch could be flipped to begin more aggressive prosecution. Gearing up would require restoring the depleted ranks and finishing pending cases, both of which could entail substantial delays at a time when the market needs to quickly regain the confidence of battered investors.

Cox did not accomplish these changes on his own. Internal agency politics, critics say, played a major role, with Cox’s Republican colleagues, particularly Paul Atkins, pressing him to roll back enforcement and rein in the division’s independence. Beginning in late 2007, the White House, which nominates S.E.C. commissioners, helped clear the way for retrenchment in enforcement by delaying the replacement of two Democratic commissioners whose terms had ended. From January through July 2008, the commission had just three members, all Republican. This gave Atkins and Kathleen Casey de facto veto power over the more moderate chairman.

The perceived absence of support for major investigations has alienated many staff members and prompted some of the enforcement division’s senior officials to quit. Since Cox took office in 2005, the staff count in the division has dropped 9 percent, to 1,124 people this year. His predecessor, William Donaldson—like Cox, a Republican—long declined to speak publicly about changes at the S.E.C. He told me recently, though, that he was aware of a “high degree of frustration” among the staff. “With the kind of problems we have now,” he said, “any attempt to reduce the effective role of the S.E.C. as a policeman has been a mistake.”

At the time President Bush named him S.E.C. chairman, Cox had served 17 years in Congress, where hestood out as one of the most effective pro-business representatives in a strongly pro-business class of House Republicans. He took the helm at the S.E.C. during a period of corporate backlash against the agency and the stringent regulations imposed by the 2002 Sarbanes-Oxley Act. The departing chairman, Donaldson, was a Bush family friend who had been appointed by the White House with the expectation that he would temper the S.E.C.’s activism. Instead, he embraced the agency’s role as cop. The business community felt “that Donaldson was too tough on corporate America and Wall Street,” says a former enforcement official. “Cox was brought in to chill it out.”

Besides pulling back on enforcement, Cox also cut back on the S.E.C.’s new risk-assessment office, created under Donaldson to help the agency do a better job of anticipating financial upheavals. After the head of that office left, Cox didn’t replace him for nearly two years. Although Donaldson had authorized and filled eight positions and planned to expand the staff to 15, by 2007 the office was staffed mainly by part-timers, who in federal budget records were regarded as the equivalent of only two full-time workers. Cox says in response that he has allocated staff to other departments that he contends perform similar functions.

Also, under Cox, the commission loosened a key limit on short-selling in 2007, scrapping what’s known as the uptick rule, which is meant to forestall plunges in share value by allowing short-selling only when a stock is rising. A year later, after heavy short-selling threatened the survival of certain large financial companies, the S.E.C. temporarily restricted the short-selling of 19 mortgage-company and bank stocks.

Cox and other S.E.C. officials have said that it wasn’t possible to anticipate the effects of the real estate bubble’s bursting. And Cox has said he’s able to do more with less by prioritizing enforcement and oversight efforts. The S.E.C., he told Congress in July, has more than four dozen pending investigations into the credit crisis. Some relate to whether improper short-selling and insider trading spurred the Bear Stearns collapse. But some members of Congress and the federal government clearly aren’t impressed. The Treasury Department has proposed grabbing for itself and the Federal Reserve some of the S.E.C.’s most important powers, including enforcement authority over brokerages and investment banks. At a Senate hearing in May,Senator Richard Durbin, a Democrat from Illinois, faulted Cox for endorsing the White House’s request for only a minor increase in the S.E.C.’s budget for 2009. Durbin noted that Cox’s budget request would mean the loss of at least 94 more staff positions throughout the S.E.C. “Developments and trends in the market call for more, not less, vigilance, to protect investors,” Durbin stated in a press release following the hearing.

Cox, in an interview that he allows to go well beyond the allotted hour, defends his record and dismisses repeated interruptions from a secretary. He is adamant that he has stepped up enforcement: “We are redoubling our efforts in every way that we know how.” He attributes the decline in penalties to an inevitable shift in the mix of cases after the resolution of big accounting scandals in the first half of this decade.

Under his leadership, Cox says, the S.E.C. has become forward-looking “in ways that traditionally we might not have been.” And he takes great pains to present himself as a champion of the small-time investor.

After we’ve shaken hands and I’m nearly at the elevator, Cox summons me back to examine a column of framed mementos on his office wall. He’s often mentioned these items when testifying before Congress as symbols of his personal commitment to regulation. They relate to Samuel Insull, the Chicago electricity magnate whose company went bust in 1932, wiping out hundreds of thousands of investors and helping prompt the establishment of the S.E.C. in 1934. The display includes a photo of Insull and a check for $3.36 made out to Cox’s grandfather—all that he got back on a $6,000 investment in the company.

Almost from the moment Cox took office, former enforcement officials say, he began chipping away behind the scenes at the S.E.C.’s enforcement division—the largest and most high-profile of the agency’s four divisions. Approval of the enforcement division’s requests to initiate investigations, which was an expeditious process under former chairman Donaldson, turned into a logjam, as the commission closely scrutinized each one. “It was like someone poured molasses on the enforcement division,” says a former enforcement division supervisor.

When the commission was divided over cases, Cox would simply take them off its agenda. The same supervisor says, “You had cases where the enforcement staff had worked hard for three years. It was finally done, on the calendar. The general counsel has reviewed it. The day arrives for your hearing before the commission, and you’re told that morning it’s been pulled. Taken off the calendar. When’s it going back on? We don’t know.” By mid-2006, this had become routine. “Cases are held up, pulled, held up, pulled,” the supervisor says.

Cox’s treatment of Linda Thomsen, the S.E.C.’s first female enforcement director, was seen by staffers as a sign of the division’s declining clout. A longtime S.E.C. lawyer, Thomsen had been named director by Donaldson just prior to his departure. Her predecessor, Steve Cutler, who had worked closely with Donaldson and several earlier enforcement directors going back to Stanley Sporkin, who held the job in the 1970s, told me that this kind of open-door relationship was the norm. Several former senior S.E.C. staffers say Thomsen had far less access.

Thomsen defends her boss. “This chairman has an extremely busy schedule,” she says. “I can get to him if I need to.” But she acknowledges that “sometimes it can take days.” Cox says, “She has complete and total access to me.” An S.E.C. spokesman says the two met as often as eight times a day during recent settlement negotiations with banks over auction-rate securities. The banks agreed to repay nearly $27 billion to investors.

Some former S.E.C. staffers say Thomsen complied too easily with the push to restrict enforcement. Cox boasts that the commission approves “99.999 percent” of the enforcement division’s recommendations. But some former S.E.C. enforcement officials say he maintains that high percentage by prevailing on Thomsen to water them down. Thomsen confirms that she has revised recommendations “from time to time” but denies that the commission has curbed enforcement efforts. “Everybody’s pro-law-enforcement” among the commissioners, she says. “Nobody likes crooks.”

Demoralized, key enforcement staffers started heading out the door. Veteran S.E.C. lawyer James Coffman left in 2007 after he was passed over for a promotion. He says that Thomsen told him he didn’t get the job because he was viewed as “too tough.” Thomsen, noting that toughness is one of the qualities necessary for an enforcement job, dismissed the notion that anyone would be denied a promotion for being “too tough.”

A budget shortfall led the S.E.C. to impose a hiring freeze in 2005. The enforcement division’s staff is divided into groups, and ordinarily 15 lawyers report to an assistant director in each one. But as the freeze dragged on, some groups dwindled to seven or eight lawyers. An S.E.C. spokesman says that if one group is overburdened, cases are reassigned to a different group.

Enforcement staffers cite two cases as examples of the agency’s retreat from tough prosecution. One is the Biovail case. When eight women died after their bus smashed into a truck loaded with Biovail antidepressant pills, the pharmaceutical maker attributed a revenue decline to inventory lost in the crash. S.E.C. enforcement lawyers charged that not only was the company’s explanation false, but Biovail had also set up a company in Barbados to inflate reported profits and was in cahoots with a pharmaceutical distributor to stage a sham sale of pills, according to the S.E.C. complaint. Although an outside expert retained by the S.E.C. recommended a much larger fine, the commissioners decided on $10 million. Biovail accepted the penalty without admitting or denying wrongdoing. Cox says the commission relied on the advice of the agency’s chief economist.

The other case involved Tenet Healthcare, a hospital company that had allegedly boosted earnings through Medicare fraud. In March 2007, the S.E.C.’s settlement talks with Tenet nearly collapsed over whether the company would be granted a “safe harbor” provision, which protects a company from liability for financial projections that are made in good faith. The S.E.C. had routinely denied this protection in fraud settlements. Accordingly, enforcement lawyers refused to make an exception for Tenet. But on the night before they were set to appear before the commission, Tenet’s lawyer fired off an appeal to the S.E.C. commissioners.

The next day, a majority of the commissioners, including Cox, made it clear that they would grant Tenet safe harbor, according to several people who attended the meeting. The enforcement staff drafted a settlement. (The company paid a $10 million penalty.) The commission’s break with precedent on this and other cases caused consternation among the enforcement staff and helped spur the departure of Randall Lee, the veteran head of the S.E.C.’s Los Angeles office, which had handled the case. Cox says the commissioners took into consideration that Tenet had new management.

A January analysis by the law firm Morgan Lewis found that S.E.C. penalties have dropped by a “staggering degree” and that “the numbers suggest a philosophical shift by the Cox commission in what constitutes an appropriate penalty.”

A spokesperson for the S.E.C., in an email statement, insists that “by any objective measure, the S.E.C.’s enforcement division has never been more effective or enjoyed greater support from the commission. The commission’s unparalleled support has brought unparalleled results from investors.”

While major cases were bogged down, commissioners quickly approved minor ones involving penny stocks, boiler-room operators, and Ponzi schemers who fleeced groups of small investors. According to former S.E.C. officials, this apparent shift in agenda was pushed in large measure by former commissioner Atkins, who stepped down in August after his term expired. One former S.E.C. official claims to have heard Atkins remark that he believed that the S.E.C. was “unconstitutionally constituted.” Atkins denies this, saying that if he had believed the S.E.C. was unconstitutional, he would not have served on the commission. But a friend of Atkins’ says, “If you surprised Paul and asked him what he really thinks of the S.E.C., he’d probably say, ‘Blow it up.’?”

Atkins, whom one former commissioner describes as “probably the most effective commissioner in the history of the S.E.C.,” benefited from Cox’s desire to build consensus. Cox shunned divided votes, delaying important matters until he could engineer a majority. Atkins wasn’t inclined to compromise. He castigated the enforcement division in speeches around the country and filed detailed public dissents in response to some of the agency’s decisions.

Atkins says the push against small-scale fraud cases has not come at the expense of large investigations. He suggests that by emphasizing such efforts, the S.E.C. adopted a strategy similar to one that former New York mayor Rudy Giuliani employed to reduce the city’s crime rate—cracking down on quality-of-life offenses and securing arrests for minor violations. “You have to concentrate on the muggings and graffiti because that builds up respect for the rule of law,” Atkins says.

But demoralized staffers don’t agree. In one instance, after commissioners had approved penalties in a microcap fraud case, Atkins says an enforcement lawyer came up to the colleague who had conducted the investigation, slapped him on the back, and said sarcastically, “Congratulations on your small case.”

http://upstart.bizjournals.com/executives/features/2008/09/18/Profile-of-SEC-Chief-Christopher-Cox.html?s=print&page=all

Financial crisis and the bailout

Role in the crisis

In 1975, the SEC’s trading and markets division ruled that investment banks must maintain a debt-to-net capital ratio of less than 12 to 1. In 2004, following extensive lobbying by the investment banks, the SEC under chairman Christopher Cox authorized five investment banks to develop their own net capital requirements. This enabled investment banks to push borrowing ratios to as high as 40 to 1.^[4] These five investment banks were Goldman Sachs, Morgan Stanley, Lehman Brothers, Bear Stearns, and Merrill Lynch. This very high debt-to-reserves helped lead to the financial crisis of 2008 by weakening the ability of these institutions to recover from losses incurred when the risky CDO and CDS bets failed.^[5][6]

Lee A. Pickard, who had been Director of the SEC’s Division of Market Regulation when the 1975 12-1 rule was ordered, said of the change, "The SEC modification in 2004 is the primary reason for all of the losses that have occurred."^[7]

===

The Securities and Exchange Commission, commonly referred to as the SEC, is the United States governing body which has primary responsibility for overseeing the regulation of the securities industry. It enforces, among other acts, the Securities Act of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company Act of 1940 and the Investment Advisors Act. It removed regulatory authority from the Federal Trade Commission.

The SEC has five Commissioners who are appointed by the President of the United States with the advice and consent of the U.S. Senate. Their terms last five years and are staggered so that one Commissioner's term ends on June 5 of each year. To ensure that the SEC remains non-partisan, no more than three Commissioners may belong to the same political party. The President also designates one of the Commissioners as Chairman, the SEC's top executive.

Contents [hide]

Organization of the SEC

The SEC headquarters are stationed in Washington, DC and has 11 regional offices across the country. ^[1] The regional offices mainly focus on investigations and bringing enforcement actions regarding securities' law violations in addition to reporting to the office of Compliance Inspections and Examinations. ^[2] The agency has five main divisions: Enforcement, Corporation Finance, Investment Management, Trading and Markets, and Risk, Strategy and Financial Innovation. ^[3] Additionally, the Washington DC SEC office contains 16 offices.

The Division of Enforcement heads up the law enforcement function of the agency by recommending that the SEC bring civil actions in federal court of before an administrative law judge. ^[4] SEC investigations are conduct in private. "The Commission can authorize the staff to file a case in federal court or bring an administrative action. In many cases, the Commission and the party charged decide to settle a matter without trial." ^[5]

The Division of Trading and Markets assists in the maintenance of fair and efficient markets. This division handles oversight of self-regulatory organizations (SROs) such as the New York Stock Exchange and the American Stock Exchange. ^[6]

The Division of Investment Management "assists the Commission in executing its responsibility for investor protection and for promoting capital formation through oversight and regulation of America's $26 trillion investment management industry. This important part of the U.S. capital markets includes mutual funds and the professional fund managers who advise them; analysts who research individual assets and asset classes; and investment advisers to individual customers." ^[7]

The Case Against Goldman Sachs

On April 16, 2010, the SEC enforcement division in Washington DC filed a securities fraud action against Goldman Sachs and Goldman Sachs employee, Fabrice Tourre for making materially misleading statements and omissions in connection with a synthetic collateralized debt obligation that Goldman Sachs structured and marketed to investors." ^[8]

As the complaint sets forth: "Goldman created Abacus 2007-AC1 in February 2007 at the request of John A. Paulson, a prominent hedge fund manager who earned an estimated $3.7 billion in 2007 by correctly wagering that the housing bubble would burst. Mr. Paulson is not named in the suit. Goldman told investors that the bonds would be chosen by an independent manager. In the case of Abacus 2007-AC1, however, Goldman let Mr. Paulson select mortgage bonds that he believed were most likely to lose value, according to the complaint. Goldman then sold the package to investors like foreign banks, pension funds and insurance companies, which would profit only if the bonds gained value. The European banks IKB and ABN Amro and other investors lost more than $1 billion in the deal, the commission said." ^[9]

“Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio,” Robert Khuzami, Director of SEC Enforcement Division. ^[10] This case looks to connect home loans originating from Countrywide Financial all the way to the trading floors of Wall Street. ^[11] The case goes into uncharted territory. The SEC must prove that Goldman Sachs defrauded investors by failing to disclose that the hedge fund that was betting against them on the market also played a role in creating what they bought. ^[12] “The question is whether Paulson’s undisclosed role in portfolio selection was material,” said Larry Ribstein, a law professor at the University of Illinois in Champaign who has written about 140 articles and 10 books on topics including securities law and professional ethics. “There’s no clear and well-defined definition of what you have to disclose in this type of transaction.” ^[13]

This case impacts both Goldman and the SEC. For Goldman, it is already damaging their reputation as a giant, untouchable investment bank on Wall Street. The same day that the SEC announced its case against Goldman, Goldman's stock dropped drastically. ^[14] Furthermore, Goldman faces possible lawsuits from Great Britain and Germany as banks in those countries are the investors, who were defrauded by Goldman. ^[15] In terms of the SEC, all eyes are on this case and whether or not the SEC can succeed against Goldman. It is a chance for the SEC to redeem their reputation after the Madoff messup, and send a strong message to Wall Street firms about their status as Securities Watchdog of the U.S. Government.

Goldman Sachs is also being investigated by the Department of Justice as well. ^[16] The DOJ probe from the Manhattan offices are not the result of an SEC referral. Rather, this investigation was underway prior to the SEC opening their investigation against Goldman. "Although the SEC frequently sends its cases to the Justice Department for possible criminal prosecution, the stakes are higher because the Goldman case involves one of Wall Street's most storied firms, a business that had survived the financial crisis with its profitability intact but now faces accusations that it misled clients. It is rare for the government to indict a company, and even the threat of criminal prosecution can doom a business. A criminal investigation destroyed the Wall Street firm Drexel Burnham Lambert in the 1980s even though the firm settled with authorities." ^[17]

Recent Financial Crisis and Criticism of the SEC

The SEC has come under great criticism in recent years first for the financial crisis within Wall Street and later with the Bernard L. Madoff ponzi scheme. Madoff created the largest Ponzi scheme in US history leading to $50 billion in losses. Madoff was arrested by federal agents December 11, 2008. He was sentenced to the maximum of 150 years in jail. ^[18]

The SEC Inspector General compiled a report looking it how the SEC failed to detect a Ponzi scheme of this magnitude. The report lays out the tips that the SEC received but failed to pursue fully. "On May 21, 2003, an unnamed hedge-fund manager sent an email to an SEC examiner laying out concerns that Mr. Madoff's self-described trading strategy didn't add up. The manager said the strategy wasn't duplicated by anyone else in the market, Mr. Madoff's accounts were in cash at month end, and there was "always replacement capital." These could be "indicia of a Ponzi scheme," he wrote." ^[19] Despite the tip, "the SEC didn't open an examination until December 2003, and an agency memo said the focus would be on front-running, a potentially abusive trading practice. The memo didn't raise questions cited by the hedge-fund manager, such as why there was an apparent lack of volume in the market to reflect Mr. Madoff's supposed trading strategy." ^[20]

"The report details six substantive complaints against Mr. Madoff received by the agency, which were followed by three investigations and two examinations. Yet the agency never verified Mr. Madoff’s trading through a third party. Time and again, it was noted that the volume of his purported options trades were implausible. When the enforcement staff received a report showing that Mr. Madoff indeed had no options positions on a certain date, the agency simply did not take any further steps." ^[21]

As a result of the SEC's failure to uncover Madoff's scheme, several investors filed a lawsuit against the SEC, alleging reliance on the SEC's clearance of Madoff, when investing with Madoff. ^[22] While the lawsuit will probably be dismissed because of sovereign immunity, the lawsuit further highlights the ineptitude of the SEC.

The SEC also played a significant role in the recent financial crisis plaguing the U.S. economy. In 2004, five major investment banks, Lehman Brothers, Bear Stearns, Morgan Stanley, Merrill Lynch, and Goldman Sachs, approached the SEC in an effort to increase their debt to cash ratio. ^[23] The investment banks asked the SEC to provide them exemptions from an old regulation that limits the amount of debt the investment banks could take on. "The exemption would unshackle billions of dollars held in reserve as a cushion against losses on their investments. Those funds could then flow up to the parent company, enabling it to invest in the fast-growing but opaque world of mortgage-backed securities; credit derivatives, a form of insurance for bond holders; and other exotic instruments." ^[24] At the time, Henry M. Paulson was the head of Goldman Sachs. ^[25]

After a 55 minute discussion and a vote, the SEC loosened the Net Capital rule, allowing investment banks to increase their debt. "the agency also decided to rely on the firms’ own computer models for determining the riskiness of investments, essentially outsourcing the job of monitoring risk to the banks themselves." ^[26] As part of the rule change, the SEC had created a supervisory program, but this program became low on the SEC's priority list.

Bear Stearns took full advantage of the looser net capital rule and borrowed more money. Its leverage ratio rose sharply to 33 to 1; in other words, for every $1 in equity, the bank borrowed $33 of debt. ^[27] Other banks also followed similar steps as Bear Stearns.

New York Times reported on the possibility of the SEC averting Bear Stearns complete failure: "The commission’s division of trading and markets “became aware of numerous potential red flags prior to Bear Stearns’s collapse, regarding its concentration of mortgage securities, high leverage, shortcomings of risk management in mortgage-backed securities and lack of compliance with the spirit of certain” capital standards, said an inspector general’s report issued last Friday. But the division “did not take actions to limit these risk factors.”" ^[28] Other banks also followed similar steps as Bear Stearns. The article goes on to further discuss the way in which the SEC outsourced its oversight to the very firms that they were supposed to police.

In recent months, the public media has heavily criticized the SEC for not moving fast enough with reforms regarding tougher financial regulations. As NPR has stated, "almost three years since banks started taking losses that led to the worst financial crisis since the Great Depression, the Securities and Exchange Commission is still asking basic questions about what happened." ^[29] The NPR further reports that the SEC sent a questionaire to collateral managers in October of 2009, asking information on "trading, allocation and valuations and advisers' disclosure," as well as other details on business management. As Lynn Turner, SEC's chief accountant in the late 1990s comments, "one wonders why this letter, especially given the general nature of it, is just now being sent. And why wasn't it sent several years ago, as the CDO market was exploding? "It makes it look like the SEC is several years behind the markets." ^[30]

"To date, the agency has little to show for its probes into the causes of the crisis that engulfed global financial markets just over a year ago. In June 2007, Christopher Cox, then the SEC chairman, testified before Congress that the agency had "about 12 investigations" under way concerning CDOs and collateralized loan obligations and similar products. A little more than a year later, Cox told Congress that the number of investigations into the financial industry, including the subprime mortgage origination business, had ballooned to more than 50 separate inquiries." ^[31]

Reforms Proposed and Shapiro's efforts to Improve SEC's image

In the face of criticism, the SEC has announced a series of reforms seeking to tighten financial regulation. Some proposed reforms include: new limits on short selling, new rules making it easier for shareholders to impact corporate management, curbing corruption in state pension plans, and overhaul of the credit-rating industry. ^[32] SEC Chair, Mary Shapiro, faces pressure from Obama Administration to act quicker in terms of passing financial reforms. The SEC may find some of its powers in the future limited as the Obama Administration has been pushing the creation of a Consumer Financial Protection Agency as the center of its financial regulation reform. ^[33] This Consumer Financial Protection Agency would attempt to look out for the financial interests of ordinary American consumers.

The most discussed recent reform proposal focuses on a rule regulating brokers and increasing their accountability to the public. The proposal seeks to create a fiduciary duty between brokers and their customers. ^[34] With a fiduciary duty to customers, Brokers would have to act in the best interests' of their clients, specifically when recommending investments. Currently, only investment advisors owe a fiduciary duty to their clients while brokers are held a lesser standard, only needing to recommend "suitable" investments to their clients. ^[35] Connecticut Senator, Christopher Dodd has proposed a bill that eliminates brokers' exemption from the Investment Advisors Act and require brokers to register as advisors, making them fiduciaries. "The Dodd bill is broader and stronger,” said John C. Coffee, a professor of securities law at Columbia Law School. “In the full-scale House bill, you see how limited it is. The House makes a new limited fiduciary standard to broker dealers, but only when they are giving personalized investment advice” about securities to a retail customer." ^[36]

In late February, the SEC passed a reform limiting short selling, which has been considered by some a cause of the 2008 financial crisis. The measure curbing short selling passed narrowly with a 3-2 vote. ^[37] As the Wall Street Journal article goes on to describe, "In short selling, investors try to profit by borrowing shares and selling them. If the shares fall, the investors can buy them back at a lower price and pocket the difference. When financial stocks were diving during 2008, critics said speculators were abusing the tactic to artificially drive down the price of certain stocks." The new rule on short selling applies to stocks that decline at least 10% in a single day. For these stocks, SEC will allow short selling "only if the price of the sale is above the highest bid price nationally." ^[38] Some Congressman have supported the SEC measure. "Rep. Gary Ackerman (D., N.Y.) applauded the SEC's action, saying it is a "vital step toward combating the artificial manipulation of stocks." Sens. Ted Kaufman (D., Del.) and Johnny Isakson (R., Ga.) called for even tougher action. They said in a joint statement that the rule will be of "limited use, helping only in the worst-case scenarios that could occur during a terrorist attack or financial crisis." ^[39]

Another reform many financial experts have called for involves curbing or banning speculative trading, especially in Credit Default Swap Markets. George Soros and Senator Maria Cantwell have supported this measure to curb speculative trading. ^[40] However, Duffie, a finance professor at Stanford University's Graduate School of Business, argues that speculative trading is not harmful to the market and that the reform should really focus on market manipulation. ^[41] As Duffie explains in the Wall Street Journal, "Those who call for stamping out speculation may be confused between speculation and market manipulation. Manipulation occurs when investors "attack a financial market in order to profit by changing the value of an investment. Profitable speculation occurs when investors accurately forecast an investment's fundamental strength or weakness."

Commissioners

Mary L. Schapiro Chairman since 2009
Kathleen L. Casey Commissioner since 2006
Elisse B. Walter Commissioner since 2008
Luis A. Aguilar Commissioner since 2008
Troy A. Paredes Commissioner since 2008

Past commissions

Under president Bill Clinton:

Arthur Levitt, Jr. - 1993-2001 (Chair: 1993-2001)
Steven Wallman - 1994-97
Norman S. Johnson - 1996-2000
Isaac C. Hunt, Jr. - 1996-2002
Paul R. Carey - 1997-2001
Laura S. Unger - 1997-2002

Under president George Walker Bush:

Harvey L. Pitt - 2001-03 (Chair: 2001-03)
Cynthia Glassman - 2002-present
Paul Atkins - 2002-present
Roel Campos - 2002-present
Harvey Goldschmid - 2002-present
William H. Donaldson - 2003-present (Chair: 2003-present)
Kathleen L. Casey (nominee 2006)

Source: SEC History.

Articles and resources

Related SourceWatch Resources

External links

Securities and Exchange Commission, Washington Post, December 18, 2002.

References

↑ SEC WebsiteWhat we Do,"SEC Website,"February 19, 2010,
↑ Organization Chart of SEC
↑ Organization Chart of SEC
↑ SEC website
↑ SEC website
↑ SEC Website"What we do","SEC Website,"February 19, 2010,
↑ SEC Website"What we do","SEC Website,"February 19, 2010,
↑ SEC Complaint,[1], "SEC," April 16, 2010.
↑ Louise Story and Gretchen Morgenson,"SEC Sues Goldman Over Housing Market Deal,","New York Times," April 16, 2010.
↑ Id.
↑ Id.
↑ Jody Shenn and Joshua Gallu,"Goldman Sachs SEC Case May Hinge on Meaning of Word 'Selected,'","Business Week," April 19, 2010.
↑ Id.
↑ Louise Story and Gretchen Morgenson,"SEC Sues Goldman Over Housing Market Deal,","New York Times," April 16, 2010.
↑ Gretchen Morgenson and Landon Thomas Jr.,"Glare on Goldman From U.S. and Beyond,","New York Times," April 18, 2010.
↑ Zachary Goldfarb and Jerry Markon,"Justice Department Opens Goldman Sachs Criminal Investigation, sources say,", "Washington Post," April 30, 2010.
↑ Id.
↑ Bernard Madoff Wiki"Bernie Madoff","Wiki,"February 12, 2010.
↑ Kara Scannell and Jenny Strasburg"Madoff Report Reveals Extent of Bungling","The Wall Street Journal,"September 9, 2009,
↑ Kara Scannell and Jenny Strasburg"Madoff Report Reveals Extent of Bungling","The Wall Street Journal,"September 9, 2009,
↑ David Stout"Scathing Report on SEC Failure to Uncover Madoff's Scheme","New York Times,"September 2,2009,
↑ Diana Henriques,"Suit Accuses SEC of Failing to Detect Madoff Scheme","New York Times,"October 14, 2009,
↑ Eric Umansky"SEC Oversight of Investment Banks was in Shambles","ProPublica",October 3, 2008,
↑ Stephen Labaton"Agency's '04 Rule Let Banks Pile Up New Debt","New York Times,"October 2,2008,
↑ Stephen Labaton"Agency's '04 Rule Let Banks Pile Up New Debt","New York Times,"October 2,2008,
↑ Stephen Labaton"Agency's '04 Rule Let Banks Pile Up New Debt","New York Times,"October 2,2008,
↑ Stephen Labaton"Agency's '04 Rule Let Banks Pile Up New Debt","New York Times,"October 2,2008,
↑ Stephen Labaton"Agency's '04 Rule Let Banks Pile Up New Debt","New York Times,"October 2,2008,
↑ Jake Bernstein and Jesse Eisinger"SEC Just Now Seeking Key Information on Meltdown","NPR,"December 16,2009,
↑ Jake Bernstein and Jesse Eisinger"SEC Just Now Seeking Key Information on Meltdown","NPR,"December 16,2009,
↑ Jake Bernstein and Jesse Eisinger"SEC Just Now Seeking Key Information on Meltdown","NPR,"December 16,2009,
↑ Zachary A. Goldfarb,"Tougher Financial Regulations Not Coming Fast Or Easy for SEC's Mary Shapiro", "The Washington Post,"February 16, 2010,
↑ [2]
↑ Tara Siegel Bernard"Tougher Financial Regulations Not Coming Fast or Easy for SEC's Mary Shapiro","New York Times,"February 15, 2010,
↑ Tara Siegel Bernard"Tougher Financial Regulations Not Coming Fast or Easy for SEC's Mary Shapiro","New York Times,"February 15, 2010,
↑ Tara Siegel Bernard"Tougher Financial Regulations Not Coming Fast or Easy for SEC's Mary Shapiro","New York Times,"February 15, 2010,
↑ Fawn Johnson"SEC Votes for Short-Sale Rule","Wall Street Journal,"February 25, 2010,
↑ Fawn Johnson"SEC Votes for Short-Sale Rule","Wall Street Journal,"February 25, 2010,
↑ Fawn Johnson"SEC Votes for Short-Sale Rule","Wall Street Journal,"February 25, 2010,
↑ Darrell Duffie"In Defense of Financial Speculation","Wall Street Journal,"February 24, 2010,
↑ Darrell Duffie"In Defense of Financial Speculation","Wall Street Journal,"February 24, 2010,

External resources

External articles

[http://online.wsj.com/article/SB10001424052702303491304575188352960427106.html "The SEC vs. Goldman," Wall Street Journal, April 19, 2010.

Susan Pulliam and Evan Perez, [http://online.wsj.com/article/SB10001424052748703572504575214652998348876.html "Criminal Probe Looks Into Goldman Trading," Wall Street Journal, April 30, 2010.

Louise Story and Sewell Chan, "Goldman Sachs Messages Showed It Thrived as Economy Fell,"," New York Times, April 24, 2010.

Daniel Wagner, "SEC Staff Watched Porn as Economy Crashed,", Times Magazine, April 22, 2010.

Matt Miller, "Goldman Sachs and the Revolt of the Lower Upper Class,, Washington Post, April 21, 2010.

Sebastian Malleby, "In Sec vs. Goldman, who's really at fault,", Washington Post, April 21, 2010.

Peter Baker, "Former White House Advisor is a Lawyer for Goldman,", New York Times, April 20, 2010.

Binyamin Appelbaum, "A Difficult Path in Goldman Case,", New York Times, April 20, 2010.

Nelson D. Schwartz, "Goldman's Revenue and Earnings Top Forecast,",New York Times, April 20, 2010.

Economist Online, "Goldman Sachs Charged by the Sec: A Volcanic Cloud Over Wall Street,", The Economist, April 16, 2010.

Theresa Barraclough, "Treasury 10-Year Yields Near 3-Week Low After SEC Sues Goldman,", Business Week, April 18, 2010.

Gretchen Morgenson and Landon Thomas Jr., "Glare on Goldman From U.S. and Beyond,", New York Times, April 18, 2010.

Louise Story and Gretchen Morgenson, "For Goldman Sachs, a Deal's Stakes Keep Growing,", New York Times, April 17, 2010.

Editorial,"Watch the Goldman Case,", New York Times, April 16, 2010.

Louise Story,"Top Goldman Leaders Said to Have Overseen Mortgage Unit,", New York Times, April 18, 2010.

Joel Seligman,"Letting the SEC self-finance would Improve Securities Regulation,", New York Times, February 25, 2010.

Deborah Solomon,"Questions for Harry Markopolos",New York Times, February 25, 2010.

Sewell Chan,"New Effort for More Regulation of Wall Street",New York Times, February 23, 2010.

Damian Paletta,"Volcker Rule Stalls in Senate",Wall Street Journal, February 24, 2010.

"Over the Years, the Rules Have Changed",New York Times, February 15, 2010.

Jenny Anderson and Zachery Kouwe,"Robert Khuzami-SEC's Enforcer on the Beat",New York Times, February 8, 2010.

Robert Smith,"In Recordings, Madoff Offers Tips to Evade SEC",NPR, September 10, 2009.

Mary Bottari,"Federal Judge Issues Blistering Decision on Failure of SEC to Police Banksters: Oscar Wilde Weighs In",Bankster USA, September 15, 2009.

Matt Renner,"Financiers Used 'Hotline' to SEC Examiners",Truthout, February 24, 2009.

http://www.sourcewatch.org/index.php/Securities_and_Exchange_Commission

===

The U.S. Securities and Exchange Commission (SEC) is a federal agency. It holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets in the United States.^[2]

In addition to the Securities Exchange Act of 1934 that created it, the SEC enforces the Securities Act of 1933, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Sarbanes–Oxley Act of 2002, and other statutes. The SEC was created by Section 4 of the Securities Exchange Act of 1934 (now codified as 15 U.S.C. § 78d and commonly referred to as the 1934 Act).

Contents

Overview

Regulatory agency, during the Great Depression that followed the Crash of 1929. The main reason for the creation of the SEC was to regulate the stock market of 1940, the Sarbanes–Oxley Act of 2002, and the Credit Rating Agency Reform Act of 2006.

The enforcement authority given by Congress allows the SEC to bring civil enforcement actions against individuals or companies alleged to have committed accounting fraud, provided false information, or engaged in insider trading or other violations of the securities law. The SEC also works with criminal law enforcement agencies to prosecute individuals and companies alike for offenses which include a criminal violation.

To achieve its mandate, the SEC enforces the statutory requirement that public companies submit quarterly and annual reports, as well as other periodic reports. In addition to annual financial reports, company executives must provide a narrative account, called the "management discussion and analysis" (MD&A), that outlines the previous year of operations and explains how the company fared in that time period. MD&A will usually also touch on the upcoming year, outlining future goals and approaches to new projects. In an attempt to level the playing field for all investors, the SEC maintains an online database called EDGAR (the Electronic Data Gathering, Analysis, and Retrieval system) online from which investors can access this and other information filed with the agency.

Quarterly and bi-annual reports from public companies are crucial for investors to make sound decisions when investing in the capital markets. Unlike banking, investment in the capital markets is not guaranteed by the federal government. The potential for big gains needs to be weighed against equally likely losses. Mandatory disclosure of financial and other information about the issuer and the security itself gives private individuals as well as large institutions the same basic facts about the public companies they invest in, thereby increasing public scrutiny while reducing insider trading and fraud.

The SEC makes reports available to the public via the EDGAR system. SEC also offers publications on investment-related topics for public education. The same online system also takes tips and complaints from investors to help the SEC track down violators of the securities laws. The SEC adheres to a strict policy that it never comments on the existence or status of an ongoing investigation.

History

Prior to the enactment of the federal securities laws and the creation of the SEC, there existed so-called blue sky laws. They were enacted and enforced at the state level, and regulated the offering and sale of securities to protect the public from fraud. Though the specific provisions of these laws varied among states, they all required the registration of all securities offerings and sales, as well as of every U.S. stockbroker and brokerage firm.^[3]

However, these blue sky laws were generally found to be ineffective. For example, the Investment Bankers Association told its members as early as 1915 that they could "ignore" blue sky laws by making securities offerings across state lines through the mail.^[4] After holding hearings on abuses on interstate frauds (commonly known as the Pecora Commission), Congress passed the Securities Act of 1933 (15 U.S.C. § 77a), which regulates interstate sales of securities (original issues) at the federal level. The subsequent Securities Exchange Act of 1934 (15 U.S.C. § 78d) regulates sales of securities in the secondary market. Section 4 of the 1934 Act created the U.S. Securities and Exchange Commission to enforce the federal securities laws. Both laws are considered part of Franklin D. Roosevelt's "New Deal" raft of legislation.

The Securities Act of 1933 is also known as the "Truth in Securities Act" and the "Federal Securities Act”, or just the "1933 Act." Its goal is to increase public trust in the capital markets by requiring uniform disclosure of information about public securities offerings. The primary drafters of 1933 Act were Huston Thompson, a former Federal Trade Commission (FTC) chairman, and Walter Miller and Ollie Butler, two attorneys in the Commerce Department's Foreign Service Division, with input from Supreme Court Justice Louis Brandeis. For the first year of the law's enactment, the enforcement of the statute rested with the Federal Trade Commission, but this power was transferred to the SEC following its creation in 1934. (Interestingly, the first, rejected draft of the Securities Act written by Samuel Untermyer vested these powers in the U.S. Post Office, because Untermyer believed that only by vesting enforcement powers with the postal service could the constitutionality of the act be assured.^[4]) The law requires that issuing companies register distributions of securities with the SEC prior to interstate sales of these securities, so that investors may have access to basic financial information about issuing companies and risks involved in investing in the securities in question. Since 1994, most registration statements (and associated materials) filed with the SEC can be accessed via the SEC’s online system, EDGAR.^[5]

The Securities Exchange Act of 1934 is also known as "the Exchange Act" or "the 1934 Act". This act regulates secondary trading between individuals and companies which are often unrelated to the original issuers of securities. Entities under the SEC’s authority include securities exchanges with physical trading floors such as the New York Stock Exchange (NYSE), self-regulatory organizations (SROs) such as the National Association of Securities Dealers (NASD), the Municipal Securities Rulemaking Board (MSRB), online trading platforms such as The NASDAQ Stock Market (NASDAQ) and ATS, and any other persons (e.g., securities brokers) engaged in transactions for the accounts of others.^[6]

President Roosevelt appointed Joseph P. Kennedy, Sr., father of President John F. Kennedy, to serve as the first Chairman of the SEC, along with James M. Landis (one of the architects of the 1934 Act and other New Deal legislation) and Ferdinand Pecora (Chief Counsel to the United States Senate Committee on Banking and Currency during its investigation of Wall Street banking and stock brokerage practices). Other prominent SEC commissioners and chairmen include William O. Douglas (who went on to be a U.S. Supreme Court justice), Jerome Frank (one of the leaders of the legal realism movement), and William J. Casey (who later headed the Central Intelligence Agency under President Ronald Reagan).

http://en.wikipedia.org/wiki/U.S._Securities_and_Exchange_Commission

===

"Outside radical groups," squawked Rep. Scott Garrett at a recent Republican inquisition into a citizens' petition that's been submitted to the Securities and Exchange Commission.

Garrett is foaming at the mouth on behalf of corporate chieftains who're pouring unlimited (and untold) amounts of their shareholders' money into our elections. The great majority of Americans agree that, at the very least, shareholders have a right to be told how much of their money is being spent on behalf of which candidates. So, more than 500,000 citizens have petitioned the SEC for such a disclosure rule.

Who are these scary citizens, considered such a threat to corporate power that a Congress critter is tarring them publicly as outside radicals? They're professors from leading law schools, state and national elected officials, pension fund directors, public interest advocates, and corporate shareholders. Not exactly outsiders, much less radicals.

And that's what makes them so dangerous to the autocratic elites who run corporations as their own fiefdoms. Top executives want no accountability for the hundreds-of-millions of shareholder dollars they're spending to elect corporate lickspittles like Garrett. Don't question us, they demand, just trust us.

Uh… no. Far from earning trust, they've already wrecked our economy and betrayed our nation's egalitarian ideals – while feathering their own plutocratic nests. Now they want free reign to pervert America's democratic process with clandestine election campaigns secretly financed with other people's money.

This is Jim Hightower saying… NO! These kleptocrats are the real radicals. It's time to stop them, not only by disclosing their thievery, but ultimately by outlawing it – and retuning elections to the people. To join the effort, contact Public Citizen: www.citizen.org.

http://www.citizen.org/Page.aspx?pid=183

"Investors urging openness on political spending," The Washington Post, May 18, 2013.

"SEC pressed to abandon rule on political disclosure," The Washington Post,

May 17, 2013.

"Angry outbursts raise risk of heart attacks," Washington Post, May 21, 2013.

===

Take Scott Garrett, a New Jersey Republican who recently came unglued at a public hearing before the House financial services committee. Mary Jo White, Chairwoman of the Securities and Exchange Commission, had been summoned by GOP inquisitors to answer to a modest, straightforward proposal involving the disclosure of corporate political donations. Actually, it is not her proposal, but a citizen petition – signed by a record half-a-million people – asking the SEC to require that corporate executives reveal to shareholders how their money is being spent in elections.

That's entirely reasonable – unless, like Garrett, you've got the political temperament of a live grenade. He exploded on Chairwoman White, demanding in a bullying manner that she "refuse to be bullied by these outside radical groups" who submitted the petition. He insisted that she declare, then and there, that the agency would not even consider the citizens' proposal.

Yes, Garrett is a corporate toady, but that can't explain his foam-at-the-mouth hissy fit. Then I learned about a new medical report about how conflicts at work cause some people's brains to release hormones that prompt them to fly into a rage and even threaten others. These corrosive hormones can make blood platelets stickier, causing the brain to go "boom," creating angry outbursts of stupidity.

This is Jim Hightower saying… So maybe Scott's problem is not merely toadyism, but sticky platelets in his brain.

"Angry outbursts raise risk of heart attacks," Washington Post, May 21, 2013.

SEC Securities and Exchange Comm

The SEC's ongoing prosecution of Sun

How Trump can use the power of the presidency to unlock hundreds of millions in profits for himself

Major media outlets obsessed with banana, ignore Sun's payment to Trump

Mad Money

Taming the SEC

Opening Up the Banks

“Stable” Coins

Financial transparency on climate change is hardly a radical idea

Right-wing groups claim financial transparency is an attack on free speech

Jay Clayton - SEC.gov

Jay Clayton (attorney) - Wikipedia

Securities and Exchange Commission appointees - Wikipedia

Dark Money

Taking Climate Change Seriously

DISCLOSE ACT WOULD SHINE A LIGHT ON DARK MONEY

VIGOROUS OPPOSITION FROM THE RIGHT

Contents

Contents

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Robert Reich: The Disgusting Way Insider Traders Rig America and How Courts Let Them

Financial crisis and the bailout

Role in the crisis

Organization of the SEC

The Case Against Goldman Sachs

Recent Financial Crisis and Criticism of the SEC

Reforms Proposed and Shapiro's efforts to Improve SEC's image

Commissioners

Past commissions

Articles and resources

Related SourceWatch Resources

External links

References

External resources

External articles

Overview

History

Attachments