Wednesday, May 20, 2009

Environment of Corruption, Yet?

Inspector General David Kotz uncovered the possible insider trading. Kotz declined CBS's formal request for an interview, citing the ongoing investigation. As related in SEC Attorneys Probed For Insider Trading, Kotz later told CBS News:

"The report talks about our concerns that there is no true compliance system at the SEC."

The SEC has had no compliance system in place to monitor the trades of their employees.

Both attorneys - who deny any wrongdoing - still work at the SEC and make six-figure salaries. The investigation was triggered after the high volume of trades by the female attorney set off alarms inside the agency. ...

In addition, the (pdf) report says that the female attorney “spent much of her work day e-mailing and searching the Internet about stocks.” It quotes her telling investigators: "It's my main hobby. It's my passion.” And: “It’s my way of keeping intellectually above what other people are doing.”

If corruption is present at an enforcement and regulatory agency populated largely by members of the legal profession, what must conflicts of interest be like in a federal goverenment populated largely by members of the same profession?

Let's not forget, the ethical tone of a nation is set by its role models, the leaders.

To corporate watchdogs, audit CPAs and their lawyers, the SEC has set the ethical tone since 1934. Look at today's economy; has the SEC's ethical tone been any more effective than Fannie Mae's?

Wasn't it Arthur Andersen's in-house counsel who advised the ENRON auditors to shred their workpapers? Yes, indeed.

Now, another lawyer:

Ex-Ernst & Young Partner Convicted of Insider Trading

May 15 (Bloomberg) -- James Gansman, who was a partner at Ernst & Young LLP, was convicted of six federal insider-trading charges.

A federal jury in Manhattan today also acquitted Gansman of three insider-trading counts and conspiracy. He faces more than 20 years in prison when sentenced Oct. 1. He is free on bail. His accomplice, Donna Murdoch, a managing director at a Philadelphia-based broker-dealer, pleaded guilty in December.

Warning: Never blindly vote for another lawyer, regardless of party affiliation.