Tuesday, March 28, 2006

The SEC's Keystone Kops (redux)

The Keystone Kops at the Securities and Exchange Commission (pictured at left during a recent open meeting) have again proven that they are adept at running in circles, or chasing the good guys while the bad guys stand around, laughing.

The laughter in this instance comes from a wide asssortment of individuals who hate tough financial reporting. I'm sure that when they read the New York Post article today, indicating that the SEC was probing contacts between Gradient Analytics and eight financial journalists, they were mighty pleased that SEC resources were being wasted in such an idiotic manner.

This is the latest chapter in a long-running, increasingly surreal battle between the aforementioned research firm and two companies, Overstock and Biovail, that don't cotton to criticism very much. Overstock is run by a joker who blames his money-losing company's travails on mysterious (and nonexisistent) "malefactors," and Biovail is a mediocre drug company that also is going the "victim" route.

These bozos have gotten the SEC enthralled. Why am I not surprised?

As I explored in a New York Times op-ed piece on Saturday, the SEC does an excellent job of slapping meaningless fines on large firms -- most recently Bear Stearns -- when they are caught in some kind of alleged (no admission of guilt is usually sought) impropriety. They also have systematically ignored massive microcap fraud, as I explore in my book.

So it stands to reason that, being singularly ineffective at punishing real transgressions, the SEC would do an outstanding job of wasting its time. Thus the current witch hunt against the handful of journalists who engage in tough financial journalism.

If the very hard-working and poorly managed folks at SEC wants to see who they are pleasing, I'd suggest that they head on over to a crackpot website called "thesanitycheck.com," where this witch hunt is currently being celebrated. This website, which is financed by unknown persons and run by a full-time scam artist who carefully guards his identity, has one purpose and one purpose only: to serve the interests of stock fraud. Its unknown, anonymous benefactors want to delude investors into believing that stocks of scummy companies decline because of "them" -- a nonexistent conspiracy -- and not the fact that they are scummy companies.

These kooks and criminals are happy. The rest of us should be sad.


Wall Street Versus America will be 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.

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