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Why the SEC Won’t Hunt Big Dogs

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Re: Why the SEC Won’t Hunt Big Dogs

#21

Post by adamtmca »

raganwald wrote: post #20
adamtmca wrote: post #10

Earlier quoted context omitted.

Case in point. Harry Markopolos is a fraud investigator who works for institutional investors "big dogs", not the SEC. He looked at Madoff's returns, the strategy they claimed they were using and took "4 hours" at home to figure out that it was fraud. Here is a choice section of Markopolos's testimony: http://www.youtube.com/watch?v=q1A7LdW0Y_s

Reading further, it may have more to do with corruption and/or apathy than inability. I doubt they couldn’t find first base in Fenway park, they simply didn’t want to go looking for trouble. https://en.wikipedia.org/wiki/Harry_Markopolos

Probably also true - I think a lot of sec prosecutors end up in defence positions later.

That said, I just can't see how they could ever attract or develop the financial minds required to keep up with wall street.

Re: Why the SEC Won’t Hunt Big Dogs

#23

Post by pork »

wanorris wrote: post #3

Pardon my pedantry, but that's a terrible mixed metaphor in the title. Who goes hunting for dogs? No one; rather, dogs accompany hunters, perhaps while in pursuit of big game .

You're correct, but dogs are rarely used in the pursuit of big game.

Re: Why the SEC Won’t Hunt Big Dogs

#24

Post by randomdata »

nobody3141 wrote: post #6
dasil003 wrote: post #5

I wish they had let Wall Street crash and burn when they had the chance. It's obvious that the majority of credible advisors had an inherent conflict of interest in proclaiming that systematic failure would destroy the economy irreparably. I say it would have been better to let the economy crumble and then rebuild it rather than allow this precedent to be set that investment banks can take any disk imaginable and it'…

Quick economics lesson. The money on Wall St doesn't belong to the guys in red braces - it is the pensions of ordinary Americans and the savings of little old ladies. Letting Wall St crash and burn means everybody in America's pension disappears - everybody over 65 is out on the street. Everybody who saved money has lost it. Nobody accepts cash anymore, after all if you put it in the bank it might dissapear. You are…

Letting Wall St crash and burn means everybody in America's pension disappears - everybody over 65 is out on the street. Everybody who saved money has lost it.

Was that not well understood beforehand? I'm Canadian, but our government will only certify certain investments. Everything else comes with the understanding that all of your money could be gone tomorrow. As such, we plan for such occasions. It is an expectation that an event like this will happen eventually.

Re: Why the SEC Won’t Hunt Big Dogs

#25

Post by yummyfajitas »

shareme wrote: post #14
njharman wrote: post #7

Earlier quoted context omitted.

The precedent was already set before. S&L others, it's a regular, periodic occurrence.

that gets bigger each time after a major financial deregulation law package passes..its an uncanny correlation..uncanny as most congress people and senators seem to be okay with overlooking it as long as their political war chests are filled with lobbyists dollars..

I'm curious - what are the major financial deregulation laws you are speaking of?

Re: Why the SEC Won’t Hunt Big Dogs

#27

Post by yummyfajitas »

pnathan wrote: post #17
cobrausn wrote: post #9

Earlier quoted context omitted.

IANAE, but this always struck me as... odd. How would the failure of the banking system stop people who really only use it for money storage and purchasing convenience from continuing to use hard currency?

Because most pensions are tied up in the market. So if the banking system deflates and resets, it drops the market value of pensions significantly. The market essentially is a herd animal. Everything goes up or down together, in aggregate. Since wisdom in the financial market is to diversify, ie, hold in aggregate, a well-chosen portfolio generally does about as well as the market in the long term. So if Grandma had…

So if Grandma had 100K in her diversified portfolio of low-risk investments and the market exploded 50%, she'd have 50K, which represents a major loss of financial capabilities.

This is most likely not the case. There are many ways the market can "explode 50%". One way is for each security to take a 50% haircut. Another is for the high risk securities to take a 100% haircut and the low risk to take a 0% haircut. Obviously real life lies somewhere in between.

However, it's not by any means obvious that the low risk, well diversified investors would take a particularly large haircut in a market crash. This is particularly true if they don't cash out immediately after the crash.

Re: Why the SEC Won’t Hunt Big Dogs

#28

Post by scott_s »

cobrausn wrote: post #19
nobody3141 wrote: post #13

Earlier quoted context omitted.

You don't trust your local bank to store your $10 bill - but you still trust the central bank not to print a billion of them tomorrow?

Never really said I did. But the fact is a lot of people still use cash, and would continue to do so (regardless of actual value) after a banking system crash. At least, I perceive it would, unless governmental authority also broke down. Then we are back to a barter economy.

Where would this cash come from? Right now, banks get it from the mints, which print it on a demand basis. And even if you use cash for most of your transactions, if you keep your money in the bank...

Re: Why the SEC Won’t Hunt Big Dogs

#29

Post by joe_the_user »

anigbrowl wrote: post #2

A few of my in-laws are working night and day, literally, to meet the legal document production requirements for a DoJ investigation of a Large Financial Institution which must remain nameless for ethical reasons. The DoJ is doing it's best to investigate Wall Street as aggressively as it can, but their electronic discovery team's annual budget is on the order of $20 million, which is peanuts when an investigation ca…

Hmm,

At what point do the claim "they are doing their best" and the claim "clearly they don't have the resources to do anything" collide and explode into burning rubble?

I can believe that there are many noble individuals in the Doj who are doing their best. But how can one not call a resource-less investigation a tooth-less investigation if you are talking about intentions of Doj itself?

Re: Why the SEC Won’t Hunt Big Dogs

#30

Post by scott_s »

cobrausn wrote: post #9
nobody3141 wrote: post #6

Earlier quoted context omitted.

Quick economics lesson. The money on Wall St doesn't belong to the guys in red braces - it is the pensions of ordinary Americans and the savings of little old ladies. Letting Wall St crash and burn means everybody in America's pension disappears - everybody over 65 is out on the street. Everybody who saved money has lost it. Nobody accepts cash anymore, after all if you put it in the bank it might dissapear. You are…

IANAE, but this always struck me as... odd. How would the failure of the banking system stop people who really only use it for money storage and purchasing convenience from continuing to use hard currency?

The economy is an interconnected system. If the banking system failed, then no one would be able to make over-night loans. If no one can make over-night loans, then large companies can't get the necessary funds for them to keep their regular operations running. If that doesn't concern you, consider that one of the largest companies in the country is General Electric. In simple terms, a failure of the banking system means the lights won't stay on.

Andrew Ross Sorkin talks about this in "Too Big To Fail" (http://www.amazon.com/Too-Big-Fail-Washington-FinancialSyste...). When things were really bad in 2008, and people were wondering what investment bank was going to go next, there was very real fear that eventually the biggest, most stable banks such as Goldman Sachs would go under. After Goldman, the next institution wouldn't be a bank. It would be GE.

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