A number of months ago, a Sloper reached out to me to tell me his story of how the SEC had charged him with insider trading and how he had to defend his innocence (a seven-figure legal expense) in a preposterous case in which the SEC finally relented. I met him face-to-face, and we even briefly discussed co-authoring a book on his story. I was amazed at the things that I heard – including tales of outright fabrication of evidence by the inept and corrupt organization which we taxpayers fund – and was distraught to learn that the pressure of the entire ordeal had also destroyed a lengthy marriage.
Then yesterday I read this article in the New York Times which seemed awfully familiar. It tells of Richard Kwak, now 72 years old, who similarly faced a charge which he vowed to fight to his last breath. He spent over a million dollars defending himself, and – once again – was acquitted of charges. Here's a small excerpt from the article:
suffers from emotional problems. He has struggled to stay out of
bankruptcy. Although he is still a broker – he certainly can’t afford
to retire – he long ago lost his job with Morgan Stanley, where he had
spent several decades without so much as a hint of impropriety.
Needless to say, his business is a small fraction of what it once was.
The article is well worth reading in its entirety, so I urge you to do so. The main point of the article is that the SEC gets its jollies out of pursuing little people on pretended charges, because little guys can't really defend themselves and make easy prey for the career bureaucrats at the SEC. Whereas firms like JP Morgan, Goldman Sachs, and good people like Bernie Madoff go utterly ignored, because (a) that's where better careers than the SEC are housed, and (b) big fish can afford to fight the SEC.
Yesterday, a Sloper wrote to me and encouraged me to provide a link to Zero Hedge's post called the SEC Needs Your Feedback. Tyler Durden, the author, seems appropriately ticked off at our good friends in Washington. So, here again, I urge you to make this part of your reading today.
Long-time readers know that my libertarian roots run pretty deep, and I'm not fan of government. But the SEC brings the lousiness of government to a new low. I'm sure the day will come when they take advantage of us bears as well, attacking those who are going to profit from the coming collapse of the equity markets, so I usually don't make a point of saying anything – – but this morning, even in the beautiful paradise of Fallen Leaf Lake, I felt the need to write something about it.
