To appoint Mary Jo White to head the SEC is to have a Fox guarding the hen house who has specialized in defending prominent foxes who have attacked and pillaged the hen house. Can America afford the risk of continuing to protect sociopathic, greedy narcissists?  Should Americans have to take the risk of having a prominent securities defense litigator in charge of the SEC?  The past is prologue.

Investors and America must finally be protected from Wall Street sociopathic greed!  And this pick is more of the same. How bad does an appointment get?  Maybe worse than Mary Schapiro who was as bad as it gets for a Democrat?  I know about this from the inside out.  Americans need to be outraged!

Because The 5th Estate is vehemently concerned with brutally candid truth and objective information – as a blazing liberal muckraker I have to be for the truth no matter what, even when it casts an unfavorable light on a potentially great President, or when a normally insightful editorial page becomes an echo from a public toilet.

So the New York Times February 8th Editorial’s conclusion about the President’s appointment of a woman with transparently profound conflicts is ludicrous.  White’s past role as the chief litigator for one of the most prominent securities defense firms in the US reflects an ability to defend anyone no matter how egregiously transparent the material substance of the  indictment, the prosecutors evidence as well as the public manifestation of the crime’s impact.  Which is very legal, however – from the names of some of her clients, and my familiarity with what constitutes securities fraud – it is self-evident why she has a different view of fraud than revealed by reality. An attorney’s ability to represent any side of any issue as a function of the legal ethics of securities litigator does not depend on what the material substance of fraud would cause a reasonable person not being paid to defend someone to conclude.  But the ability of lawyers to ignore the truth and to always see two sides is what disqualifies Mrs. White from protecting the public considering she has specialized in getting culprits – get out of jail free cards.

Therefore, the Times should have irrefutably stated that Mary White’s professional activities and relationships totally disqualify her from “protecting investors,” and explained why.  Fundamental conflicts at her level cannot be overlooked or trusted.   (Think about whether you could defend someone who tanked a bank and billions of investors’ dollars went down the drain.)

And Obama certainly should know better – it is time to just say no to his continuing appointments of people from Wall Street and their defenders. 

What about Eliot Spitzer or the Attorney General of New York, Eric Schneiderman;  both are Democrats with a high profile track record of having the balls and integrity to go against Wall Street.  Neither has represented or defended high profile individuals indicted for securities crimes; and both have extensive knowledge of what constitutes securities fraud.  Foxes do not successfully guard hen houses, especially when their agenda is different than the people who want to keep chickens alive to lay eggs.  Foxes are known to eat hens along with the eggs.

The Times editorial pointed out: “it is crucial that she avoids the appearance of conflict in SEC matters.”  Are they kidding, does this mean that a sincere transvestite would be different in men’s clothing?  Is appearance the controlling issue, or is it the material substance of profound conflicts.

From 4 decades of dealing with the SEC – licensed in 1968 and as the former owner of an NASD Member Firm Broker Dealer; from having written 2 books which involve securities, the latest exposing the endemic failures of primary regulators to intervene prior to the moment of truth in 2008 – I know what is so wrong with an appointment like this.

White is an echo from the past.  From 45 years of successful personal experience, I know how naïve it is for the Times to think White will do what no Secretary or Chairman of the SEC has historically done: which is care about the truth and investor protection more than the incomes of former colleagues and friends.

Mary Schapiro’s mission statement (the statement she wrote) from the SEC’s website was quoted by the Times and pointed out that White should advance the SEC’s mission to “protect individual investors by ensuring that markets are transparent, well regulated and vigorously policed.”  This quote should be remembered if or when $700 trillion to $1.2 quadrillion derivatives hit toilets around the world.  And the SEC’s “mission” is infinitely better defined by the 1933 Securities Act which has little to do with the mission statement and everything to do with what the SEC does not do to protect individual investors.  Transparent is a transparently phony issue!


How does making derivatives transparent protect investors when derivatives have no foundational value and are too complex to explain? It is currently unlawful to issue a complex security that cannot be explained well enough to be understood – based on existing Fed regulations and a number of 10b5 SEC regulations.  What if poop is transparent, does being able to see it change the substance or the obvious odor – at least poop is real.  Wait until the smell of derivatives is on the soles of shoes around the world, do you need to step in something before you can smell it?

Excerpts from How We Got Swindled by Wall Street Godfathers, Greed & Financial Darwinism ~ The 30-Year War Against the American Dream:

From current Fed Bank Holding Company Regulations:  “IM-2210-1. Communications with the Public About Collateralized Mortgage Obligations (CMOs) – (a) General Considerations, … (3) Safety Claims – A communication should not overstate the relative safety … (5) Simplicity Claims – CMOs are complex securities and require full, fair and clear disclosure in order to be understood by the investor. So if any security is too complex to explain it seems that it would be illegal (unlawful) to sell it…”

From current SEC regulations:  “Section 10(b) of the 1934 Securities Exchange Act makes it “unlawful for any person…to use or employ, in connection with the purchase of sale of any security.., any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the SEC may prescribe.” 15 U.S. C. sec.78j. Rule 10b-5, which implements this provision, forbids the use, “in connection with the purchase or sale of any security, “of any device, scheme, or artifice to defraud” or any other “act, practice, or course of business” that “operates…as a fraud or deceit.” 17 CFR sec. 240. 10b-5 (2000) One of Congress’ primary objectives in passing the act was “to insure honest securities markets and thereby promote investor confidence” after the market crash of 1929. United States v. O’Hagan, 521 U.S. C. 642, 658…”

 “(1997) Further Congress wanted “‘to substitute a philosophy of full disclosure for the philosophy of caveat emptor and thus achieve a high standard of business ethics in the securities industry.’ “So far the SEC has not applied the concept of “deceptive device or contrivance” to the lack of substance of Swaps or Mortgage Backed Subprime Bonds – but it is very clear that these bonds and many Swaps were definitely securitized. It is self-evident that innovative financial products embody many of the basic elements that rule 10b-5 was designed to address, and this chapter will argue that the SEC has been more derelict in its responsibilities than anyone has imagined. The controlling issue behind financial products is that they have been manipulated to camouflage and misrepresent risk and the lack of explainable real substance. …”

How We Got Swindle is the only book that has exposed these regulations which clearly have not been enforced – not by the Fed and not by the SEC. (Significant regulations have the force of law behind them, so laws were violated.) In isolated instances the SEC, in response to terrible press, has stepped up to the line to exact peanut-like punishments from multi-billionaire culprits.  For the SEC to have sued some of the banks, and never put the culprits in jail, in the aftermath of letting the banks implode is like having a member of the Manson family prosecute Charlie.  And like the Manson family the SEC did (does) not intervene. Further, it is self-evident that the Justice Department has been in a legal and moral coma.

 The Times went on to explain that – “Mrs. Whites top priority is to finish overdue rules to carry out Dodd-Frank financial reform and other security laws.”  Dodd-Frank was designed to fail. And to have placed the SEC in charge of making up rules for Dodd-Frank is to have doomed Dodd-Frank from its inception.  To think that Dodd-Frank will ever result in rules that interfere with making markets to provide liquidity for derivatives (markets which seem to be virtual markets stemming from computer modeling to bet real money on) is less realistic than your favorite pipe-dream.

The SEC is supposed to guard the hen house – hen house means all the investors (we the people) and real financial markets required to maintain a viable American economy and capitalistic system.  And the faulty reasoning behind appointing Mary Jo White is a regurgitation of the historical lack of regulatory enforcement – which was a major causal factor in creating the 2nd worst economy since 1776 and the corresponding vast chasm of financial inequality.

There is a war against the middle class and the SEC has been a primary culprit. So another appointment like Schapiro or Cox is just wrong, which is why I am so vehemently, and objectively outraged – and everyone who cares should share my outrage to speak out against this.

 What is the President thinking:  and the New York Times?

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