Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

How SEC "Revolving Doors" Protects Wall Street's Fraudsters

Politics / Market Regulation Aug 09, 2013 - 07:24 PM GMT

By: Money_Morning

Politics

Shah Gilani writes: A funny thing happened on Robert Khuzami's way to a $5 million-a-year job.

By funny I mean sickening; by sickening I mean a travesty of a mockery of a sham; by a travesty of a mockery of a sham I mean how the operatives at the SEC sometimes operate.


Robert Khuzami, the recent former head of enforcement at the Securities and Exchange Commission, just signed with powerhouse law firm Kirkland & Ellis, one of the nation's biggest corporate firms, for a deal that guarantees him $5 million a year for at least the next two years.

After that, who knows? He might work his way up to join the top slot prestidigitators, I mean professionals, at the firm, who are paid about $8 million a year.

Good for him. He's smart, aggressive, and knows how the games are played. He's a playa.

Not at the SEC, of course. There, as the top dog biting the behinds of Wall Street miscreants, the good-looking enforcement chief did a bang-up job chasing down inside traders like Raj Rajaratnam and Rajat Gupta.

And to his credit, he bit the bicycle wheels of the fast-moving Goldman Sachs, slowing them down enough to pay a $550 million fine in 2010 for misleading investors on a collateralized debt obligation (CDO) deal called Abacus.

You may know that round two of that fight - over whether or not Goldman's man, the Fabulous Fab Tourre, who put one part of Abacus together (there were several deals under the Abacus name), did so with the help of hedge fund honcho John Paulson to guarantee the product would fail and Paulson would reap a windfall - was just found guilty of fraud relating to the deal.

Here's what you probably don't know...

Goldman wasn't the only one doing this.

Another huge purveyor of built-to-blow-up CDO deals put together with the help of John Paulson was Deutsche Bank.

Here's something else you probably didn't know.

While Deutsche Bank was looked at, two years after Goldman was fined in July 2010, for doing exactly what Goldman did - only the name of their cherry bombs came under the START label - nothing ever came of the look through.

I searched and searched, but I couldn't find anything through the SEC's looking glass about them looking into Deutsche for duplicating the fraud that Goldman never admitted nor denied perpetuating.

In 2012 the German magazine Der Spiegel broke the story that the SEC was looking at Deutsche's dealings on the slippery slopes of slicing and dicing synthetic CDOs into potable H-bombs. But there's no après-ski happy ending, or any ending at all that I could find. Not even on the SEC's website (here), where a host of dispositions on the same subject are listed.

Want to know why?

Well, here's something you probably don't know.

At the time Deutsche Bank's darling derivatives do-gooders were putting together the firm's planned obsolesce CDO deals, Robert Khuzami was, get this, the Deutsche Bank's General Counsel for the Americas and Global Head of Litigation and Regulatory Investigations (starting in 2002).

Isn't that interesting?

Khuzami stayed at the bank until 2009, interestingly enough, just until all the you-know-what was hitting the fan. His boss at Deutsche, Richard H. Walker, who had met Khuzami at Cadwalader, Wickersham & Taft when Walker was a partner there, later recommended him for the enforcement job at the SEC - a job Walker once held himself.

Nothing ever came of the SEC, under deputy dog Khuzami, looking at Deutsche's CDO tripwires. But they probably could have extracted hundreds of millions of dollars from them, as they did Goldman.

How do I figure that? Because just a few months ago, in March 2013, Deutsche Bank reached a $17.5 million settlement with Massachusetts regulators who said the firm's employees didn't disclose conflicts of interest tied to collateralized debt obligations before the financial crisis. (Details of that settlement here.)

The travesty of a mockery of a sham is that "revolving doors" like this are all over Washington. And as Khuzami's kabuki theatrics prove, a wink is as good as a nod to a blind horse.

To learn more about Wall Street's shenanigans and opportunities, and to subscribe to Shah Gilani's free newsletter Wall Street Insights and Indictments click here...

Source :http://moneymorning.com/2013/08/09/how-sec-revolving-doors-protect-wall-streets-fraudsters/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in