Garrett Harris 12:36 a.m., June 19
Watchdog report shows how Wall Street law firms manipulate SEC
Villain is "revolving door" -- securities agency lawyers getting hired by white shoe firms
The Project on Government Oversight (POGO) released this morning (Feb. 11) another report on how Wall Street law firms influence the Securities and Exchange Commission (SEC) by hiring its lawyers for fat compensation. The quid pro quo is Wall Street titans, clients of the big firms, getting away with frauds that would have an ordinary stockbroker subject to severe discipline, or if the case were referred to a criminal agency, landing behind bars. After studying thousands of government documents, POGO found that former staff members of the SEC routinely: 1. Tried to help corporations influence agency rulemaking; 2. Defended companies suspected of wrongdoing; 3. Helped companies soften the blow of enforcement actions; 4. Won exemptions from federal law for their clients, and 5. Secured the agency's blessing for companies to bock shareholder proposals on issues such as excessive executive pay. From 2001 through 2010, 419 former SEC employees filed 1,949 disclosure statements indicating their intent to contact the SEC on behalf of an employer or client. POGO earlier released a similar report.
"The relentless flow of SEC officials to and from industry can enable powerhouse firms to shape the SEC's culture and sway policies," says Michael Smallberg, author of the POGO report. POGO says the study is particularly relevant in light of President Obama's nomination of Mary Jo White, a former top partner of Debevoise and Plimpton, to head the SEC.
San Diego attorney Gary Aguirre has been outspoken about the revolving door. Columnist Matt Taibbi of Rolling Stone has followed the issue closely, as has the Reader.