You might have heard the news recently that the victims of Bernie Madoff would get some of their money back. The news was bittersweet - that's because those folks are only getting some of the money, just $312 million was expected to be distributed. Total losses of victims? $17 billion.
It's still tough in this country to steal $17 billion without anyone noticing - and if you're wondering where the cops were - well, that is a smart question. Truth is, the announcement about payments to victims got lots of attention - but another announcement, this one from regulators at the Securities and the Exchange Commission, got too little attention this weekend.
Four years after Madoff's arrest - the SEC said it had disciplined eight employees for failing to uncover the pyramid scheme over a 16-year period. What's notable here? Nobody lost their job. The biggest Ponzi scheme in the world operates in plain sight right under the noses of the nation's biggest securities regulators - and everybody keeps their jobs. Unbelievable!
But frankly, it's not the first time that the SEC has missed a big fish. Allen Stanford, the Texas-based financier ran a Ponzi scheme for 12 years before the agency halted the fraud, potentially costing investors more than a billion dollars. That according to an agency watchdog's report.
In both cases, the SEC was given tips but couldn't translate the tips into a successful prosecution. Then there are the companies that commit violations. When the SEC manages to find one of those, the form of punishment is usually a few bucks and a vow to never do that bad thing again.
The New York Times recently conducted an analysis of the "punishments" handed down by the SEC over the past 15 years. At least 51 cases involved Wall Street firms breaking a law they had agreed never to break again!
Last month, Citigroup had to fork over $285 million to settle charges it defrauded customers -- they had to promise to never do it again - but guess what - that was them doing it again!
Citigroup had already agreed not to violate that exact antifraud statute in 2010, 2006, 2005, and 2000! Bank of America has promised not to violate that law four times since 2005, they made the same promises four times regarding a separate law. In fact, the list of repeat offenders goes on and on and on. A Wall Street who's who if you will. AIG, Credit Suisse, Goldman Sachs, JP Morgan Chase, Morgan Stanley, Raymond James, UBS, Wells Fargo, etc.
So obviously this practice is not deterring the bad behavior - so why do they do it?
The SEC told the Times the "never-do-it-again promises" were a much cheaper form of punishment than taking big banks to court. Especially if they lose! And as if that wasn't bad enough, another problem plaguing the SEC? They don't actually make the company admit their mistakes or wrong-doings!
So Citigroup or Bank of America can simply shell out a few million dollars. And never have to face what they did wrong. The public is never the wiser. This is outrageous.
Don't forget this was the agency whose workers spent more time surfing porn then looking out for the consumer! If the SEC doesn't have the ability to actually catch warning signs or enforce the law - maybe it's time to streamline this process.
The Justice Department can throw these crooks behind bars - that sounds good to me!