The Securities and Exchange Commission is supposed to be Wall Street’s top cop, charged with protecting investors while it ensures that brokers and bankers adhere to the rules.
The New York Times reports that recent articles in The New Yorker and Fortune, however, raise questions about whether the agency was willing to take on tough cases against one Wall Street firm, Goldman Sachs, and its executives. They feed into a broader concern about whether the agency can adequately police the markets by taking on the biggest players.
Jesse Eisinger of ProPublica, who has contributed to DealBook and has delved deeply into the financial crisis, wrote the article in The New Yorker about the S.E.C.’s decision not to pursue charges against any senior executives at Goldman related to a synthetic collateralised debt obligation put together by the firm. Fabrice Tourre, a midlevel trader who helped structure the transaction, was the only individual accused of wrongdoing.
A lawyer at the S.E.C. assigned to the case provided materials showing that the agency seemed to avoid pursuing more senior executives for their role in the deal, at least not until the last moment. A supervisor at the agency stated in an email that many involved in the transaction were “good people who had done one bad thing,” and later wrote about the financial crisis “that the vast majority of the losses suffered had nothing to do with fraud and the like and are more fairly attributable to lesser human failings of greed, arrogance and stupidity of which we are all guilty from time to time.”
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