dChan
Anonymous ID: 7d4a77 March 6, 2019, 5:18 a.m. No.5535508   🗄️.is đź”—kun

5 Failures of SEC Chairman Cox

(from 2008)

read it and weep ktwat

been a problem for many year's

 

Almost all paths of incompetence in the current crisis run through the office of the Chairman of the SEC, Chris Cox. McCain’s solution to fire Cox isn’t tough enough. Exile is better. Fortunately for Cox this isn’t the Stalinist Soviet Union or his fate could be a lot worse.

 

Cox’s failures are too numerous to count. However, I’ll give it a try. Below are what I think are his top 5 failings.

 

Failure to enforce disclosure laws and regulations.

 

Disclosure rules and regulations protect investors by requiring companies to disclose everything that is needed for informed investment decisions. And, CEOs and CFOs are required to sign certifications that such disclosure is materially accurate, complete, and that their companies have adequate internal controls to ensure such accuracy and completeness.

 

Enforcement of disclosure rules and regulations has been a joke. CEOs lie to shareholders with impunity and without fear of SEC enforcement. It is impossible to conclude that SEC filings for Freddie, Fannie, AIG, Lehman, or Bear Stearns complied with SEC rules and regulations.

 

However, instead of enforcement by the SEC, there is silence. While not all management actions are criminal, why hasn’t the SEC used its civil enforcement authority, i.e., assessing fines and penalties? How about protecting future investors by banning failed executives and boards of directors from serving in executive management at other public companies?

 

Failure to enforce accounting standards.

 

When Cox states that the SEC doesn’t have regulatory authority over capital adequacy of financial services companies, he isn’t telling the truth. The SEC has regulatory authority over the financial statements of ALL publicly traded companies in the U.S. which of course includes the financials. If Cox had required greater reserves and transparency of financial services companies it would have happened.

 

Every quarter all publicly traded companies file reports with the SEC that are provided to shareholders and the SEC has review and comment authority. If the SEC deems financial disclosure inadequate, incomplete or opaque it has the authority to force the company to amend its filings. It also has authority to establish accounting standards for publicly traded companies which means it can have different requirements than GAAP.

 

So when AIG filed its last quarterly report and decided that it didn’t need to have loan loss reserves against defaulting mortgages and securities, the SEC had the ability to require additional loan loss reserves. When Freddie and Fannie decided to pretend that defaulted mortgage were good assets because they changed their accounting standards, the SEC could have just said “no”. When Lehman manufactured $2.4 billion of pre-tax income by pretending that it wasn’t going to repay its debts (one of the dumber aspects of mark to market accounting), the SEC should have protected investors with disclosure.

 

Failure to supervise the rating agencies.

 

  1. Cox wants everyone to believe that despite being the rating agencies' only regulator, the SEC has no oversight or enforcement authority and cannot influence their performance. Once again, the SEC’s statements are false. Cox assumes that no one will take the time to read the Credit Rating Agency Reform Act of 2006 which states that the SEC has the right to suspend or revoke the license of any rating agency for a wide range of reasons. Rating agency regulation and reform is Cox’s responsibility.

 

Failure to investigate and prevent market manipulation, i.e., naked short selling.

 

  1. Free markets are supposed to be honest markets. The naked short selling issue isn’t new and the SEC’s knee-jerk emergency response is an embarrassment. The ban on short selling of 799 stocks is very similar to Putin’s actions this week to manipulate the Russian stock market. I haven’t a clue whether or not the uptick rule works, but I know that enforcing rules on naked short selling shouldn’t have required destructive and ill-thought-out emergency orders. In the middle of the 1800’s the legendary financial scoundrel, Daniel Drew, understood naked short selling was bad (as he lost his fortune covering a short squeeze) when he said, “He who sells what isn’t his’n, Must buy it back or go to prison.” Too bad Cox never took economic history in school (or googled economic trivia).

 

Failure to protect small investors.

 

https://seekingalpha.com/article/96487-5-failures-of-sec-chairman-cox

Anonymous ID: 7d4a77 March 6, 2019, 6:17 a.m. No.5535973   🗄️.is đź”—kun

>>5535934

that some of these executives are selling the shares they own at a fast rate. No confidence in own business. Especially the big amounts.

Many execs have trading plans tied to overall compensation and that is a different issue. These represent transactions that are well above 'normal' ones. In some cases these execs are selling huge portions of what they own. Go to the site listed for sauce and you can put in any stock symbol and check what those people are doing and have done