You Can Fool One Regulator All of the Time
The SEC today proudly announced that it had charged Scottrade, the giant Internet brokerage, with fraud. Way to go, SEC! Yes indeedy, quite a feat of securities watchdoggery -- or so it seems until you read the actual press release, which indicates that the SEC had hauled out its favorite weapon, the limp soba noodle.
Any reader of Wall Street Versus America will be familiar with my "wet soba noodle" metaphor, which described how the SEC treats securities transgressors with kid gloves (when it is not ignoring their depredations entirely). So it is with Scottrade, which misrepresented the way it handles certain Nasdaq trades.
Scottrade was slapped, in the most limp-wristed sense of the word, with a $950,000 civil penalty and an agreement never to do again what it just has not admitted doing.
For another example of your SEC in inaction, check out Sam Antar's recent blog post describing how Overstock.com hoodwinked the SEC:"What Overstock.com Did Not Tell the Securities and Exchange Commission."
It's a detailed analysis and compelling reading. But for a real enjoyment, get a load of the SEC patting itself on the back after slapping Scottrade with a ridiculously ineffectual penalty.
I think it was Chris Byron who called the press the "SEC's seeing-eye dog." But that is not fair to the blind. A better metaphor would involve not visual acuity, but intestinal fortitude.
© 2008 Gary Weiss. All rights reserved.