Don Bauder 10:30 p.m., July 24
Delicious Irony: SEC Clears San Diego Councilmembers at the Time the Public Is Learning What a Worthless Agency It Is
The Securities and Exchange Commission has ended its investigation into the involvement of San Diego's elected officials in the fraudulent bond offerings. This comes at the very time that the SEC will be investigating itself (supposedly); it admits that it had credible information on the alleged $50 billion Ponzi scheme of Bernard Madoff, but didn't act. This is the agency's modus operandi. It does NOT act against the rich and powerful, unless it is forced to do so in highly-publicized cases such as Madoff, Worldcom and Enron. It chases small-time pump-and-dumpers and people trading on inside information, but ignores those who rake in hundreds of millions in such scams. In the San Diego case, the council structured an increase in benefits and decrease in income that created a debt that was not taken to public vote. These councilmembers personally benefited from these benefit increases -- including some who had previously worked for the City, so got double-goodies. During this period, the council hired former SEC lawyers who specifically told them what had to be revealed publicly in bond offerings. But when those offerings came out, the information about the City's damaging pension liabilities was not revealed. The councilmembers keep saying they relied on advice of others, but the advice they got from the former SEC lawyers was to reveal, not conceal. It was clear many months ago that the SEC would do nothing to elected officials. There are both criminal and civil cases against bureaucrats who were down the line, but not against the people at the top. This is absolutely typical of the SEC and other so-called law enforcement agencies as well. I love the statement by Jim Madaffer's lawyer: "The SEC is the authoritative voice on this." Tragically true. By choosing a longtime Washington insider, Mary Schapiro, to head the SEC, it appears that President-elect Obama has no intention of changing the system. Money talks.