The SEC Botches Decade-Long Amex Probe

My Portfolio.com column today examines one of the longest-running legal disputes in SEC history--a ten-year-long struggle to decide how weak a penalty to impose on the American Stock Exchange and its CEO, Salvatore Sodano.

The SEC found in 2000 that the Amex had done an awful job of keeping its floor traders honest, and directed that it shape up. The Amex did nothing. The SEC reacted to that act of nonfeasance by engaging in a little nonfeasance of its own.

In the end it decided to impose a penalty that was not only weak, but nonexistent.

© 2010 Gary Weiss. All rights reserved.

The Media Fumbles on Amex

I wasn't expecting page-one coverage of the SEC's soba-noodle slap yesterday at the American Stock Exchange, which it essentially found was an utter failure at supervising its floor brokers. But I thought it was pretty startling how little attention that it received.

The New York Times totally ignored the story. Not even a news brief. (The Post's Roddy Boyd had a pretty good wrapup, by contrast.) The Wall Street Journal ran a story on page C5 (subscription only, so I won't bother to link) describing how the ex-CEO, Salvatore Sodano, was being pursued for not doing a great job at the Amex. But the central issue, that the Amex is an absolute joke, received short shrift.

Now, I must say, it is interesting that Sodano is dean of the Frank G. Zarb School of Business at Hofstra University. I didn't even know there was a Frank G. Zarb School of Business. But.... what about the Amex? Isn't it doing a lousy job? Shouldn't it be... well, maybe shut down?

Just asking. What I do know is that it's not every day that an entire stock exchange is found to be a complete failure. Isn't that news?

© 2007 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.

SEC to Amex: Don't Drop Dead

The Securities and Exchange Commission today settled some mighty serious charges today with the American Stock Exchange, which it says has done exactly zilch to police its trading floor -- the subject of an article that I had in Business Week eight years ago.

The SEC statement announcing the settlement is here. Ex-CEO Salvatore Sodano is fighting charges against him, apparently.

Here's what's striking about this case: the SEC found essentially the same nonfeasance as it did in 2000, when it settled almost identical charges with the Amex.

So why just a censure? Why not just admit the Amex can't or won't supervise the Amex trading floor and shut the damn thing down? Hell, the Amex still won't admit it did a thing wrong: "Without admitting or denying the Commission's findings, the Amex consented to the issuance of the Commission's order."

Enough already. Shut it down.

© 2007 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.