Yes this is true,,who authourised the 750 billion increase though, you must admit that something is wrong,that increase is absurd!I don't need to explain the purpose of that increase do I.Why would it be ok'd Regulatory failures[edit]
The SEC has been criticized "for being too 'tentative and fearful' in confronting wrongdoing on Wall Street", and for doing "an especially poor job of holding executives accountable".[28][29][30]
Christopher Cox, the former SEC chairman, has recognized the organization's multiple failures in relation to the Bernard Madoff fraud.[31] Starting with an investigation in 1992 into a Madoff feeder fund that only invested with Madoff, and which, according to the SEC, promised "curiously steady" returns, the SEC did not investigate indications that something was amiss in Madoff's investment firm.[32] The SEC has been accused of missing numerous red flags and ignoring tips on Madoff's alleged fraud.[33]
As a result, Cox said that an investigation would ensue into "all staff contact and relationships with the Madoff family and firm, and their impact, if any, on decisions by staff regarding the firm".[34] SEC Assistant Director of the Office of Compliance Investigations Eric Swanson had met Madoff's niece, Shana Madoff, when Swanson was conducting an SEC examination of whether Bernard Madoff was running a Ponzi scheme because she was the firm's compliance attorney. The investigation was closed, and Swanson subsequently left the SEC, and married Shana Madoff.[35]
Approximately 45 per cent of institutional investors thought that better oversight by the SEC could have prevented the Madoff fraud.[36] Harry Markopolos complained to the SEC's Boston office in 2000, telling the SEC staff they should investigate Madoff because it was impossible to legally make the profits Madoff claimed using the investment strategies that he said he used.[37]
A similar failure occurred in the case of Allen Stanford, who sold fake certificates of deposit to tens of thousands of people, many of them working-class retirees. In 1997, the SEC's own examiners spotted the fraud and warned about it. But the Enforcement division would not pursue Stanford, despite repeated warnings by SEC examiners over the years.[38] After the Madoff fraud emerged, the SEC finally took action against Stanford in 2009.
In June 2010, the SEC settled a wrongful termination lawsuit with former SEC enforcement lawyer Gary J. Aguirre, who was terminated in September 2005 following his attempt to subpoena Wall Street figure John J. Mack in an insider trading case involving hedge fund Pequot Capital Management;[39] Mary Jo White, who was at the time representing Morgan Stanley later nominated as chair of the SEC, was involved in this case.[40] While the insider case was dropped at the time, a month prior to the SEC's settlement with Aguirre the SEC filed charges against Pequot.[39] The Senate released a report in August 2007 detailing the issue and calling for reform of the SEC.[41]
Others have criticized the SEC for taking an overly rule-based and enforcement-focused approach to regulation, rather than an approach that emphasizes industry-wide safety and learning and thus ensures the reliability of the national securities trading system.[42]
Inspector General office failures[edit]
In 2009, the Project on Government Oversight, a government watchdog group, sent a letter to Congress criticizing the SEC for failing to implement more than half of the recommendations made to it by its Inspector General.[43] According to POGO, in the prior two years, the SEC had taken no action on 27 out of 52 recommended reforms suggested in Inspector General reports, and still had a "pending" status on 197 of the 312 recommendations made in audit reports. Some of the recommendations included imposing disciplinary action on SEC employees who receive improper gifts or other favors from financial companies, and investigating and reporting the causes of the failures to detect the Madoff ponzi scheme.[44]
In a 2011 article by Matt Taibbi in Rolling Stone, former SEC employees were interviewed and commented negatively on the SEC's Office of the Inspector General (OIG). Going to the OIG was "well-known to be a career-killer".[45]
Because of concerns raised by David P. Weber, former SEC Chief Investigator, regarding conduct by SEC Inspector General H. David Kotz, Inspector General David C. Williams of the U.S. Postal Service was brought in to conduct an independent, outside review of Kotz's alleged improper conduct in 2012.[46] Williams concluded in his 66-page Report that Kotz violated ethics rules by overseeing probes that involved people with whom he had conflicts of interest due to "personal relationships."[46][47] The report questioned Kotz's work on the Madoff investigation, among others, because Kotz was a "very good friend" with Markopolos.[47][48][49][50] It concluded that while it was unclear when Kotz and Markopolos became friends, it would have violated U.S. ethics rules if their relationship began before or during Kotz's Madoff investigation.[47] The report also found that Kotz himself "appeared to have a conflict of interest" and should not have opened his Standford investigation, because he was friends with a female attorney who represented victims of the fraud.[48]
Destruction of documents[edit]
"After you have closed a MUI that has not become an investigation…you should dispose of any documents obtained in connection with the MUI."
-Instructions to SEC employees on an SEC intranet[45]
According to former SEC employee and whistleblower Darcy Flynn, also reported by Taibbi, the agency routinely destroyed thousands of documents related to preliminary investigations of alleged crimes committed by Deutsche Bank, Goldman Sachs, Lehman Brothers, SAC Capital, and other financial companies involved in the Great Recession that the SEC was supposed to have been regulating. The documents included those relating to "Matters Under Inquiry", or MUI, the name the SEC gives to the first stages of the investigation process. The tradition of destruction began as early as the 1990s. This SEC activity eventually caused a conflict with the National Archives and Records Administration when it was revealed to them in 2010 by Flynn. Flynn also described a meeting at the SEC in which top staff discussed refusing to admit the destruction had taken place, because it was possibly illegal.[45]
Iowa Republican Senator Charles Grassley, among others, took note of Flynn's call for protection as a whistleblower, and the story of the agency's document-handling procedures. The SEC issued a statement defending its procedures. NPR quoted University of Denver Sturm College of Law professor Jay Brown as saying: "My initial take on this is it's a tempest in a teapot," and Jacob Frenkel, a securities lawyer in the Washington, D.C., area, as saying in effect "there's no allegation the SEC tossed sensitive documents from banks it got under subpoena in high-profile cases that investors and lawmakers care about". NPR concluded its report:
The debate boils down to this: What does an investigative record mean to Congress? And the courts? Under the law, those investigative records must be kept for 25 years. But federal officials say no judge has ruled that papers related to early-stage SEC inquiries are investigative records. The SEC's inspector general says he's conducting a thorough investigation into the allegations. [Kotz] tells NPR that he'll issue a report by the end of September.[51]ong, that increase is absurd!
