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SEC Hit With Data Destruction Complaint

Soulskill posted about 3 years ago | from the stop-playing-plinko-with-your-backup-tapes dept.

Government 148

DMandPenfold writes "The Securities and Exchange Commission (SEC), the US financial regulator, has been accused of destroying thousands of data files on high profile inquiries including an early-stage investigation into convicted Ponzi scheme fraudster Bernard Madoff. The allegations, raised by former SEC employee Darcy Flynn, have prompted the US Senate Judiciary Committee to write to SEC chairwoman Mary Schapiro to demand an immediate explanation. The SEC exists to set a tough example on corporate governance, and it fines banks heavily for both lax practice and deliberate malpractice. Questions over any involvement it may have in sensitive document destruction are not likely to sit comfortably with some in the industry. The SEC insists it has kept records in accordance with the law on its computer system."

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Need more proof? (0)

Anonymous Coward | about 3 years ago | (#37207008)

They will protect their own.

This (0)

Anonymous Coward | about 3 years ago | (#37208110)

Corporations Own the Government [mimiandeunice.com]

Re:This (1)

Gilmoure (18428) | about 3 years ago | (#37208330)

Well, yeah! The courts have said that corporations are better than people. It's time for them to be in charge and to sweep all the little people ($350k/year income) away and make room for the new pharaohs' age.

Re:This (1)

Tsingi (870990) | about 3 years ago | (#37210258)

I think the position of the courts is that corporations have the same rights as people. People with bottomless pockets. Not entirely equal that is.

What doesn't seem to be in line is accountability. When was the last time a corporation was executed for murder?

Corporations don't pay for their crimes, we pay for their crimes. And pay and pay and pay ...

I'd like to see BP torn apart for what they have done in the gulf, the same for Wall street. Revoke the charter of these world class criminals, that might have an effect. Fines don't change anything.

Anyone surprised? (3, Interesting)

squidflakes (905524) | about 3 years ago | (#37207020)

The agency that is supposed to keep the banks from committing the kinds of fraud they have been blatantly committing in the last 10 years or so has been wiping data. Ooops!

Re:Anyone surprised? (0, Troll)

jhoegl (638955) | about 3 years ago | (#37207624)

About as surprised as the agency that was voted for by congress and given funds by congress as a response to the loan practices that caused the housing bubble to collapse in 2008, has no direction or head, and is as powerless as ever.

You voted for republicans? You got your wish. Fuck you for buying our stuff, too bad if it has poison in it, affects your health long term, or we are dumping in your favorite river. Fuck you if what we say is different from what we do. Fuck you, because buyer beware is the Republican belief.

http://www.cpsc.gov/ [cpsc.gov]
http://www.consumerfinance.gov/ [consumerfinance.gov]
http://www.ftc.gov/bcp/ [ftc.gov]
None of which do shit because the laws are such that they are terrible.

Re:Anyone surprised? (1, Troll)

Grishnakh (216268) | about 3 years ago | (#37207948)

In case you haven't noticed, nothing different was done when Democrats had control of Congress between 2007 and 2010, and the whole time a Democrat has been in the White House (2009-now).

Remember, all these Federal agencies are part of the Executive Branch, and as such, are run by Obama.

Voting for Democrats won't get you different results, only different excuses ("the mean Republicans made us do it!!"). Heck, Obama is turning out to be a better Republican than Bush ever was. At least with Bush in charge, 6-year-old children didn't have to worry about being molested at the airport.

Re:Anyone surprised? (1)

jhoegl (638955) | about 3 years ago | (#37208114)

Where do you get your facts, because they are incorrect.
The way nominations work, the republicans have had the power to resist nominations for Obama. He hasnt been able to get anything done because Republicans are preventing it. THey are doing this to make him look bad and they dont give a fuck about the people these nominations would protect, help, or advance the government.
As for running them, you cant run them when the nominations are being blocked.

Re:Anyone surprised? (2)

Grishnakh (216268) | about 3 years ago | (#37208212)

Oh please. If Obama really wants to get anything done, he just has to make a signing statement and override them. Bush did it all the time; he made more signing statements than any President in history.

Sitting around and whining, like Obama seems to be doing, doesn't get you anywhere.

Re:Anyone surprised? (0)

Anonymous Coward | about 3 years ago | (#37208352)

Wait, are you saying that the solution to having bad representatives isn't to get better ones, it's to embrace dictatorship?

Really?

Re:Anyone surprised? (1)

Grishnakh (216268) | about 3 years ago | (#37208556)

So you're saying Bush was a dictator? Is that why he stepped down when his term was up? Funny, I've never heard of a dictator stepping down after a normal, scheduled election.

A few dictatorial actions to not make a dictator. The whole purpose of an executive is to have someone given the power to take action, without having to come to consensus with a committee. There have been governments with no executive, and only committees; they never did very well, because no one can agree on everything. This is why we have an executive, but then we limit him with a short time period before we elect someone new.

So what's your suggestion? Try to get all Americans to agree to vote for better representatives? Do you really think that's going to happen? Our population is easily misled by politicians who tell us raising taxes on the ultra-rich is going to hurt our economy. Having the President sit around and say "well, there's nothing I can do because you haven't elected Congresspeople who all agree with me on everything, so we'll just have to be happy letting our economy go down the toilet while the rich people raid the coffers" isn't going to improve matters.

Re:Anyone surprised? (1)

Dragonslicer (991472) | about 3 years ago | (#37208622)

Aren't "signing statements" additions that the president makes to laws passed by Congress (i.e. when the president signs the bill)? I don't think Obama can make signing statements about judicial and agency nominees that are never even voted on.

Re:Anyone surprised? (1)

Grishnakh (216268) | about 3 years ago | (#37208772)

Good point, after reading the Wikipedia article it looks like you're right.

But surely there's something else the guy can do; he's the President after all. These federal agencies don't go without anyone running them just because he can't get a nominee through Congress. So who's running them?

Re:Anyone surprised? (1)

Dragonslicer (991472) | about 3 years ago | (#37208840)

As someone else pointed out, he can unilaterally appoint people when Congress is on vacation, though Bush also took a lot of heat for that tactic.

Re:Anyone surprised? (2)

Grishnakh (216268) | about 3 years ago | (#37209080)

Thank you for pointing that out; I had forgotten about this.

Bush took heat for it, but he was re-elected, wasn't he? If Obama doesn't want to look like a limp-wristed fool, he needs to start acting more like Bush did. No, it's not ideal to bypass Congress, but if there's no other way to get things done, you gotta do what you gotta do. If Obama just kowtows to a Republican Congress and its whims, then he's effectively pursuing a Republican agenda, and there's no point in voting for him rather than a Republican presidential candidate. If the Republican Congress won't work with him on anything, then he needs to do things unilaterally. Then, he can see what the voters think of his actions. If they disapprove, they'll vote for someone else. If they approve, they'll re-elect him.

Re:Anyone surprised? (0)

Anonymous Coward | about 3 years ago | (#37209320)

Obama just used a signing statement to basically enact the DREAM act. So yeah, he can pretty much do what he wants.

Re:Anyone surprised? (1)

SydShamino (547793) | about 3 years ago | (#37209710)

Signing statements aren't legal. I'm glad Obama is breaking the law less than Bush did.

Re:Anyone surprised? (1)

Grishnakh (216268) | about 3 years ago | (#37209988)

Yes, actually, they are. Presidents have been using them for decades, with no ill consequences whatsoever. That makes them legal.

You can't say something is "illegal" if there's no law against it, and people do it for decades on end without any legal repercussions.

Re:Anyone surprised? (0)

Anonymous Coward | about 3 years ago | (#37208278)

Where do you get your facts, because they are incorrect.

The way nominations work, the republicans have had the power to resist nominations for Obama.

Where do *you* get your information about the appointment process? As long as the President is willing to take the political heat for it, the appointment process provides (http://en.wikipedia.org/wiki/Recess_appointment [wikipedia.org] ) a method for Obama to appoint heads to those agencies.

When it's something Obama actually cares about (like administering Farm Credits, Homeland Security, Unions a.k.a. National Labor Relations Board, or Equal Employment Opportunity) he has been willing to use recess appointments to fill agency positions http://www.whitehouse.gov/the-press-office/president-obama-announces-recess-appointments-key-administration-positions [whitehouse.gov] . When it's something like watchdogging Wall Street that he doesn't want to do anymore than the Republicans in Congress do, *then* he leaves the agency positions vacant.

Re:Anyone surprised? (1)

dwhitman (105201) | about 3 years ago | (#37208542)

Where do *you* get your information about the appointment process? As long as the President is willing to take the political heat for it, the appointment process provides (http://en.wikipedia.org/wiki/Recess_appointment [wikipedia.org] ) a method for Obama to appoint heads to those agencies.

The R's have keep Congress in session via the farce of keeping one clown in DC to gavel in 1 minute sessions each day. No recess = no recess appointments. Thanks for playing.

Re:Anyone surprised? (1)

chill (34294) | about 3 years ago | (#37208580)

Recess appointment are short-term fixes. Quoting your own link to Wikipedia:

To remain in effect a recess appointment must be approved by the Senate by the end of the next session of Congress, or the position becomes vacant again; in current practice this means that a recess appointment must be approved by roughly the end of the next calendar year.

Re:Anyone surprised? (0)

squidflakes (905524) | about 3 years ago | (#37208036)

b-b-b-but, the free market!

Re:Anyone surprised? (0)

Gilmoure (18428) | about 3 years ago | (#37208348)

Free market means the meanest, sneakiest, most underhanded dog wins. It's time to give up on all this civilization and enlightenment claptrap and return to dog-eat-dog world.

Re:Anyone surprised? (2)

Bob the Super Hamste (1152367) | about 3 years ago | (#37208198)

I like to beat up on the Republicans as much as anyone, but as far as effectively regulating the banking and financial industry the problem seems to be institutional and not related to a specific party. The donkey party took over the house and senate in 07. Also keep in mind that Barney Frank (D) was all over the House Financial Services Committee [wikipedia.org] so you really can't just blame the Rs for lax regulation.

Re:Anyone surprised? (1)

Anonymous Coward | about 3 years ago | (#37207650)

This is simply a response to, "We have to get government off the backs of business."

We were successful getting government off the backs of business just before the savings and loan scandal.

We were successful getting government off the backs of business just before the Bernie Madoff scandal.

We were successful getting government off the backs of business just before the mortgage scandal.

We will be successful in getting government off the backs of business as we are about to drastically reduce government spending...and that has always proven to be very good for the taxpayer...NOT!

Re:Anyone surprised? (1)

AngryNick (891056) | about 3 years ago | (#37207834)

I doubt there was much in the way of malicious activity. Based on my experience with records management rules at an "old-school institution", my guess is that the SEC has a very detailed retention policy regarding how to handle "documents subject to litigation" and an entirely different detailed policy on "electronic data retention" that is more focused on freeing up server space than the preservation or data.

My other guess is that the people in charge of policy enforcement, lawyers and records manager-types approaching retirement age, are well versed in the paper-based document retention policies, but have left much of the interpretation and enforcement of the data policies up to the kids in IT. As a result, you have order-takers in IT deciding when a shared drive needs to be purged or when someone's mail file is in need of trimming. "Hey, the policy says to trim mail files that exceed 200MB and purge shared drives of documents more than 90-days old, so I did."

Re:Anyone surprised? (2)

squidflakes (905524) | about 3 years ago | (#37207894)

I can only point to personal experience here, but I've been in IT in companies on the receiving end of SEC audits. They may have been rendered toothless, but they know how to retain data, preserve data, and recover data when Joe Sysadmin "accidentally" complies with an e-mail or document deletion policy.

I would have a hard time believing that the records destroyed, especially when pertaining to high profile cases, weren't done maliciously.

However, no proof, so there we go.

Re:Anyone surprised? (1)

erroneus (253617) | about 3 years ago | (#37208698)

Similar to the missing emails from the Bush administration.

Basically, someone has blown a whistle and now everyone is looking. Nothing will come of this.

Re:Anyone surprised? (0)

Anonymous Coward | about 3 years ago | (#37208780)

I believe I read a news story about this a while back. The issue seems to be that any preliminary investigation that didn't meet the higher ups requirements to be made official, had all its evidence destroyed. This resulted in Bernie Madoff and others being looked at for possible violations but no investigation as you couldn't make the case of prior suspicious activities. If something did finally turn up, all the old records were long gone.

Re:Anyone surprised? (2)

dave562 (969951) | about 3 years ago | (#37208886)

I doubt there was much in the way of malicious activity.

You're way off. Read the original article that details the specifics. In short, the SEC was required by law to maintain the records that they destroyed and they failed to do so. Then after destroying the records, they came up with some weasel word definition of what a "record" really is.. a la Bill Clinton.

http://www.rollingstone.com/politics/news/is-the-sec-covering-up-wall-street-crimes-20110817 [rollingstone.com]

Re:Anyone surprised? (1)

AngryNick (891056) | about 3 years ago | (#37209980)

You're way off.

Ok, ok, I read (parts of) YFA...i'm at work. I'm happy to bow to your viewpoint after I've had more time to read. My summary opinion: Malice would involve these people choosing to destroy materials that they wouldn't normally destroy given the same fact pattern.

The policy the SEC worked out with the Archives may be stupid (even illegal), but I'd still bet that the people involved were doing the same thing they'd done with every other "matter under investigation" that was ever dropped. Unlike the actions of a few people at Arthur Andersen on October 23, 2001 [wikipedia.org] , who were fully aware that their material was subject to investigation.

Re:Anyone surprised? (1)

ObsessiveMathsFreak (773371) | about 3 years ago | (#37207962)

Hopefully, the bigger whoops will come when someone decides to look over the (offsite?) data backups.

Expect Treason Charges on Darcy Flynn soon... (4, Insightful)

paulsnx2 (453081) | about 3 years ago | (#37207036)

... That is what has happened to every other whistle blower under this administration. And the worse the corruption exposed, the worse the sentence. If the SEC is guilty of total fraud sheltering billions of dollars in Wall Street theft, then expect the DOJ to go for the death sentence for Darcy Flynn.

Re:Expect Treason Charges on Darcy Flynn soon... (0)

Anonymous Coward | about 3 years ago | (#37207142)

Nah. Death sentences get media attention. He might commit "suicide" though, wink wink, nudge nudge.

Re:Expect Treason Charges on Darcy Flynn soon... (0)

couchslug (175151) | about 3 years ago | (#37207358)

That's why there is no hope for peaceful change.

Joe Stack was a hero.

Re:Expect Treason Charges on Darcy Flynn soon... (0)

Anonymous Coward | about 3 years ago | (#37207432)

...for killing some random sixty year old Vietnam vet?

Re:Expect Treason Charges on Darcy Flynn soon... (1)

h4rr4r (612664) | about 3 years ago | (#37207546)

and for stealing from everyone by not paying his own taxes while still using roads, airports, and other government services.

Re:Expect Treason Charges on Darcy Flynn soon... (1)

Anonymous Coward | about 3 years ago | (#37208058)

Joe Stack was an idiot. If you're going to do something dramatic and want to effect change, flying your puny plane into a building and killing some random government employee isn't going to help matters, in fact it'll probably make them worse, or at least it'll make anyone who agrees with you look like a fool.

If Joe wanted to do something really useful, he should picked something that would have really affected the people in power. Assassinating multiple high-level elected officials, for instance, after picking them out for specific corrupt acts, and publicly announcing what they did and why they've been targeted. Of course, taking a course of action like this will earn you the "traitor" label (because our Congressmen are such upstanding, moral people after all who are really doing their best to work for all Americans...) and an execution, but obviously Joe had already decided to forfeit his life anyway so that shouldn't have been much of a concern for him like it would be for most other people.

Re:Expect Treason Charges on Darcy Flynn soon... (1)

cayenne8 (626475) | about 3 years ago | (#37207916)

. If the SEC is guilty of total fraud sheltering billions of dollars in Wall Street theft, then expect the DOJ to go for the death sentence for Darcy Flynn.

Why on earth would you expect that?

Hell, there's been VERY little done to expose and try to get to the bottom of the 'Fast and Furious' scandal...which looks like WAS known about by Eric Holder, but why is there no investigation into this major SNAFU where numerous Mexicans AND US law enforcement agents and civilians have been killed by this royal fuckup?

Justice dept, Executive Branch and Congress haven't exactly shown the usual fortitude in trying to get to the bottom of this, when it looks a good deal like it goes straight to the top of many departments on who knew of and signed off on this fiasco.

ON the other hand..you might be right..would be a nice little headline to distract from the FAF controversy.

Those greedy Madoff investors will probably sue (4, Interesting)

elrous0 (869638) | about 3 years ago | (#37207088)

All those greedy bastards who invested with Madoff and were pissed that all they would get back was their *actual* investment have been whining for months about not getting their fictional 10%-a-year interest back too. Now they'll probably use stuff like this to sue the SEC and recoup their fictional gains out of all of *our* pockets. Just great.

RE: US Ponzi (1, Informative)

Technician (215283) | about 3 years ago | (#37207180)

The US government is running the exact same ponzi scheme. With a good credit rating and increasing debt attracting investors in unsustainable deficit spending, Standard and Poor called it in the last negotiations to raise the limit. It is a risky investment even though the past payment record has been perfect. Obama has declared the rating invalid. This is like Enron declaring a downgrade invalid.

Re: US Ponzi (5, Insightful)

RingDev (879105) | about 3 years ago | (#37207490)

S&P called it because a political party in the US was prepaired to default on our debt.

If violating our Constitution had not been presented as a "valid" option by the Tea Party, the S&P rating never would have changed.

As soon as the Tea Party forced the issue and started pissing on the very document they claim to love and defend, the only way to prevent the down grade was to create a meaningful adjustment of spending and revenue. And again, thanks to the Tea Party, the outcome of that came up short.

And it isn't a "Risky investment". It's AA rated. It puts us on par with utility companies and other extremely stable business sectors. The point of AAA ratings is that they are for entities that are legally require to pay out on debts. The US is still constitutionally required to pay out on debts, so by the standard we should still be AAA. But far right ideologs like Bachman and Perry keep spewing crap that makes the world think that we could actually default dispite our constitution.

Some of the blaim is Obama's with out a doubt, he's been playing the gentle leader roll ever since the GOP coined the "Ramming it down our throats" talking point in the year long insurance reform debate.

Re: US Ponzi (0, Troll)

cayenne8 (626475) | about 3 years ago | (#37207988)

Well, someone had to get the attention of the Executive branch...and the public. Obama is about to spend us into oblivion. He's run up more debt in less than 3 years that GW Bush did in his whole 8 years...

Could it have been handled better? Sure...but it did at least get them started talking about some serious reform we need. I dunno if it will actually happen, but at least it is on top of the conversation stack at this point.

And at the very least..even if they hadn't passed the ceiling raise (which I had no doubt they would at the last minute)...the US would still have paid its debts...we'd just have had to emergency cut some funding to programs, which might have been tough on some, but we'd have survived ok.

Re: US Ponzi (4, Informative)

GodfatherofSoul (174979) | about 3 years ago | (#37208200)

Wrong. The lions share of our debt comes from the deficit caused by the Bush tax cuts and the unbudgeted spending for the Iraq war. I saw a chart from a couple months ago that attributed about 10% of our $14 trillion debt to Obama.

More debt? (1)

bigtrike (904535) | about 3 years ago | (#37208478)

Bush's tax cuts, medicare changes, and wars have cost us $5 trillion, about 1/3 of our total debt.

Re: US Ponzi (4, Informative)

TheNinjaroach (878876) | about 3 years ago | (#37208642)

Obama [... has] run up more debt in less than 3 years that GW Bush did in his whole 8 years...

There's no need for lies here. We've incurred $2.4 trillion in debt under Obama and a staggering $6.1 trillion under GW.

Don't believe me? You can check for yourself [nytimes.com] , but I don't take you to be a facts-based kinda guy.

Re: US Ponzi (1)

ThatsMyNick (2004126) | about 3 years ago | (#37210200)

Too bad, at this rate, at the end of his 8 years term (assuming he will get reelected of course), he would have surpassed debt under GW, by another 50%.

Re: US Ponzi (1)

microbox (704317) | about 3 years ago | (#37208876)

You should really examine the confirmation bias [wikipedia.org] before opening your mouth /ever/ again.

There are well accepted reasons for deficit spending. Bush/Cheney did it for no good reason other then getting the votes of jingoists and the elderly, and lining the pockets of big pharma. In eight years the created only 3 million jobs, the economy shrunk everywhere execpt the financial industry, and they dug a deep financial whole for when deficit spending was really necessary.

Bush's own treasurey secretary walked off the job in 2002. Heck, Bush himself admits that he is responssible for a lot of the current problems in the United States.

Not saying the Obama has a perfect record -- not by a long stretch -- but stop and smell the shit your shovelling.

My one main gripe with Republicans is their hipocracy over fiscal responsiblity. After Reagan, Bush H., and Bush W., it is amazing that anyone still believes it. At least the former two at the good sense to raise tax revenue.

Thanks to the confirmation bias, however, all these little drones run around talking about how fiscally irresponsible the Democrats are.

Re: US Ponzi (0)

Anonymous Coward | about 3 years ago | (#37208898)

Kind of a mediocre trolling attempt there. Keep at it thought, in no time you could lure dozens of angry responses!

Hugs and kisses,

Juan Epstein

Re: US Ponzi (1)

Palshife (60519) | about 3 years ago | (#37209480)

Obama is about to spend us into oblivion. He's run up more debt in less than 3 years that GW Bush did in his whole 8 years

Incorrect.

Increase in debt under George W. Bush: $6,106 billion
Increase in debt under Barack Obama through the end of 2010: $1,653 billion

Source: http://en.wikipedia.org/wiki/National_debt_by_U.S._presidential_terms [wikipedia.org]

What's your source?

Re: US Ponzi (1)

Grishnakh (216268) | about 3 years ago | (#37208090)

Some of the blaim is Obama's with out a doubt, he's been playing the gentle leader roll ever since the GOP coined the "Ramming it down our throats" talking point in the year long insurance reform debate.

Obama is absolutely complicit. Just look at his actions, not his words, which are meaningless. Obama has gone along with everything the Republicans wanted, so that means he must favor those things. He just says different things to make you think otherwise. The man is a liar, and this should be no surprise, because he was a lawyer before he got into politics. Lawyers are nothing but professional liars and sociopaths.

Re: US Ponzi (1)

microbox (704317) | about 3 years ago | (#37208954)

so that means he must favor those things

It is very difficult to know what politicians really favour, because politics is the art of spin and backroom deals. It would be interesting to see what Obama got in return for going along with the Republicans, or if he got screwed because he was the weaker negotiator. Or he could really be a Republican trojan horse.

Now, we /did/ see Obama go up against the healthcare companies. So we know he believes in something.

Re: US Ponzi (1)

Grishnakh (216268) | about 3 years ago | (#37209178)

Now, we /did/ see Obama go up against the healthcare companies. So we know he believes in something.

He did? The results don't show much. We got a healthcare "reform" that didn't really reform anything. In exchange for the bit about not denying people for pre-existing conditions (which still hasn't taken effect IIRC), they got tons of concessions including the requirement that people buy insurance, which is plainly unconstitutional. You can't require people to buy stuff by law; if the government deems something so important that it wants to force it on the people (like, say, Social Security or curbside trash collection), then it has to do so by making it a government service, not by forcing people to buy something from a private company.

Re: US Ponzi (0)

Anonymous Coward | about 3 years ago | (#37209582)

I know it is a pretty sorry piece of reform. The health-care lobby is one of the most powerful institutions in this country. Now, if politicians weren't so interested in vote grabbing, then the Democrats and Republicans could have ganged up against the health-care lobby, and then we'd see useful meaningful reform. But with the current political climate...

Re: US Ponzi (1)

KahabutDieDrake (1515139) | about 3 years ago | (#37209748)

Um... so you wrote that with the implied assumption that that USA will in fact pay back those debts... something it has failed to do for the last 200 years or so. I'm just curious, you see, I'm not a math guy, so I'm just curious where you think the money to pay those debts is going to come from? Also while answering that question, I want you to find the GDP of the USA and compare it, on a graph, to the deficit go back at least 10 years.

What you will find, is that the USA economy is built on the principle of growth. A LOT of growth. In fact, growth that is utterly and completely unsustainable. Furthermore, the budget in effect right now, assumes that the money to pay off the debt is raises will come in a future generation/budget. It won't. It never has, and short of massive cuts, it never will (we've never cut more than 2% in a fiscal year). And arguably, any cut deep enough to really matter is going to fubar the economy so bad we would actually be worse off. (like taking 50% out of the military budget).

Now, like I said, I'm not a math guy... but I can read a projection just like anyone. The projections say that the USA will NEVER pay off that debt. In fact, any realistic person looking at international debt/income/payments would have to assume that the ENTIRE scheme is a ponzi scam. There is NO PLACE ON EARTH where the money to pay off international debt can come from, without creating A) more ACTUAL debt or B) economic restructuring.

Re: US Ponzi (1)

squidflakes (905524) | about 3 years ago | (#37208010)

Nation scale debt isn't like home debt and never will be. No private citizen, no matter how rich or powerful, has the ability to issue a fiat currency, so anything you cite that relates to corporate or personal finance is pretty much invalid. The whole "we can't keep spending like this!" chestnut is false. Your idea that U.S. debt is a ponzi scheme shows that you don't understand finance or the workings of the ponzi.

Notice how U.S. t-bills have had a huge run in the last few weeks following the debt ceiling raise? That's because the financial markets know that US debt is still the absolute safest bond on the market, period.

Re: US Ponzi (1)

Serious Callers Only (1022605) | about 3 years ago | (#37209986)

This is like Enron declaring a downgrade invalid.

Or like Enron paying for a triple A rating 4 days before their collapse? Companies like Enron pay for their rating from supposedly impartial ratings agencies who have been handed a monopoly on rating by the US gov and allowed to charge the people they are rating money for supplying that rating. S&P and the other rating agencies are now steeped in corruption, and have been since they started taking money for their ratings - they are definitely not an innocent party calling it as they see it I'm afraid, they are as corrupt as any of the players in this game.

That's not to say they are wrong on the US debt - the US probably doesn't deserve an AAA rating, as the default by stealth which is induced inflation and QE is full speed ahead already, meaning that creditors in the rest of the world are being bilked to preserve the US in the style to which it has become accustomed. However S&P calling the US gov at this point in time is more likely a play to get kickbacks or favours from major clients like goldman sachs tipped off prior to the downgrade than a drive for truth - the ratings agencies haven't produced an honest rating in decades.

Re:Those greedy Madoff investors will probably sue (0)

Anonymous Coward | about 3 years ago | (#37209198)

Bullshit. Most of these "greedy bastards" were invested through feeder funds (I was). We got back nothing so far.

"..not likely to sit comfortably" (1)

billrp (1530055) | about 3 years ago | (#37207144)

".. with some in the industry". Huh? I would think the "industry" would be delighted that any documents related to any investigation are destroyed.

Justice (1)

Hatta (162192) | about 3 years ago | (#37207148)

The DOJ has shown itself to be completely unwilling to prosecute bankers or their regulators. It's clear that the only chance we have for justice is vigilante justice. I would really like to see some poor guy who has had his life ruined by these criminals snap and start assassinating bankers and financial regulators. These people need to learn that there are consequences.

Re:Justice (1)

couchslug (175151) | about 3 years ago | (#37207420)

Imposing consequences is sometimes costly, but credit where due (and I otherwise don't admire Commies) these folks went at it with professionalism and gusto:

http://en.wikipedia.org/wiki/Red_Army_Faction [wikipedia.org]

Re:Justice (1)

goldspider (445116) | about 3 years ago | (#37207460)

I see you're prepared to discuss the issue rationally....

Re:Justice (1)

overlordofmu (1422163) | about 3 years ago | (#37207638)

Violence begets violence.

If you want to dismantle the military-industrial-complex, you do not start by validating is existence by behaving in a violent and short sighted manner.

"Look at the violent, poor youth in the UK! Rioting. Looting. Please, jackbooted thugs, please protect us!"

These reckless youths have the middle class begging for a more authoritarian police state. BEGGING FOR IT!!

The first things that the revolutionaries need to do is to stop behaving in immoral ways. All their violent, destructive behaviour does is to legitimise the police state they seek to illegitimise.

Re:Justice (1, Interesting)

Grishnakh (216268) | about 3 years ago | (#37208284)

Sorry, but violence is pretty much the only way to effect change. History has shown this over and over.

If a group of corrupt, evil people are running things, how else do you propose to get rid of them? They're not going to go on their own.

Just look at all the revolutions in the Arab world recently. Were they peaceful? No, not really, especially the one in Libya. Some of them got lucky, like in Egypt where the violence was minimal (though present) and the leaders stepped down before long, but others have been very violent because the leaders refuse to go. When that happens, what non-violent recourse do you suggest? Try to convince these sociopaths that they should do the "right thing"? Ask them nicely?

The reckless youths in the UK weren't conducting a revolution, they were just a bunch of criminals looting stores. Revolutionaries target the government and attempt to overthrow it or destabilize it somehow. Running around and setting historic businesses on fire doesn't do that.

Violence is a last resort (1)

microbox (704317) | about 3 years ago | (#37209034)

Violence is the last resort of the disempowered. Justice is said to belong to the courts -- a system that reduces violence in society a great deal. But if the courts fail...

When you talk everything away from someone, you eventually lose control over them, and then they turn on you.

Not saying that I support violence, but I *am* saying that we should consider a larger picture for why these things happen. That is, if you consider intelligence to be of some utility in preventing violent outbreaks from happening again.

Re:Justice (1)

dkleinsc (563838) | about 3 years ago | (#37207890)

The DOJ has shown itself to be completely unwilling to prosecute bankers or their regulators.

Not only that, but the DoJ has also taken steps to punish other government officials, notably New York AG Eric Schneiderman [salon.com] , for looking for ways to prosecute under their own authority. They've made it clear that the only penalty the Obama administration will accept for the banks is a fine of somewhere around $60 billion, which will look like a big number to satisfy the public but is peanuts compared to what those banks earned with their illegal practices.

Re:Justice (1)

zzsmirkzz (974536) | about 3 years ago | (#37208302)

For bankers, it's the Double Death!!!

no worries (5, Funny)

Trepidity (597) | about 3 years ago | (#37207178)

I'm confident that an SEC investigation of this issue will set the record straight.

Re:no worries (0)

Anonymous Coward | about 3 years ago | (#37208818)

Actually, they already did the investigation. Unfortunately we can't seem to find the results anywhere.

Covering their asses (0)

Anonymous Coward | about 3 years ago | (#37207190)

People like Madoff don't exist without anyone knowing about it. People all the way to the top are fully aware of these ponzi fraudsters but nothiing is done.

Madoff was taken down for political reasons. They've known about him for years and there is significant proof of this.

I'm not at all surprised that people in the SEC are scrambling to cover their asses.

Rolling Stone (5, Informative)

geekmansworld (950281) | about 3 years ago | (#37207200)

Those interested in the particulars might also want to check out a recent Rolling Stone article by Matt Taibbi. Basically, the SEC feels that until an actual case is opened, it is not required to store files for "matters under investigation". Definitely worth a read.

http://www.rollingstone.com/politics/news/is-the-sec-covering-up-wall-street-crimes-20110817 [rollingstone.com]

Re:Rolling Stone (2)

gknoy (899301) | about 3 years ago | (#37210182)

There've been several Rolling Stone articles on the subject linked in this discussion thread. I think I got them all collected so far:

http://www.rollingstone.com/politics/news/why-isnt-wall-street-in-jail-20110216?print=true [rollingstone.com]
http://www.rollingstone.com/politics/news/the-real-housewives-of-wall-street-look-whos-cashing-in-on-the-bailout-20110411?print=true [rollingstone.com]
http://www.rollingstone.com/politics/news/is-the-sec-covering-up-wall-street-crimes-20110817?print=true [rollingstone.com]

Now if only I had time to read them.

Revolving door (4, Informative)

greg1104 (461138) | about 3 years ago | (#37207254)

The SEC doesn't enforce anything at the big banks, because those companies are where ex-SEC lawyers go if they want a big paycheck later. You don't prosecute your future employer. They only go after little fish just so they can appear as if they are doing their job. Small hedge fund who did something wrong? Expect the SEC to kick your ass if you cross them. Firm like Goldman? The SEC management will stop any attempt to investigate them, because the top people have their eye on retiring from there to a cushy Goldman job.

There's a good chat with Matt Taibii, author of the fun Why Isn't Wall Street in Jail? [rollingstone.com] , discussing how SEC Document Shredding Covers Up Wall Street Crimes [dailybail.com] . This has been going on for a long time now, and the shredding is central to why the Bernie Madoff scheme wasn't caught earlier too.

Re:Revolving door (1)

PPH (736903) | about 3 years ago | (#37207414)

The Madoff instance is interesting in that he ran a relatively small shop. Unlike Goldman, there wasn't room in his organization to park a bunch of ex-SEC buddies. And its likely that they realized this, so their motivation probably lies elsewhere.

The SEC is engaged in 'pulling back' profits taken out of the Madoff Ponzi scheme by earlier investors. My suspicion: Some of the SEC staffers (or family, to avoid conflict of interest) may have been early Madoff investors. If the preliminary investigations suggested that these investments were frauds, the staffers would likely pull their funds and then cover their tracks.

Re:Revolving door (1)

Kreigaffe (765218) | about 3 years ago | (#37207982)

Madoff is a smart guy -- all the evidence you need is wrapped up in his Ponzi scheme.

I suspect you're spot-on about the early investors. I suspect that, if that IS in fact true, that Madoff most likely did that intentionally -- he's got them by the balls in two ways.

Firstly, bringing them in early and paying out to them? Bribery. Keep quiet about things, here's a ton of money.
Secondly, blackmail. Oh, by the way, this is all totally illegal and you are now complicit. Enjoy your money, keep your mouth shut or we ALL go down in flames.
Thirdly.. there is no thirdly, I think that probably covers it well enough actually.

has kept records in accordance with the law (1)

countertrolling (1585477) | about 3 years ago | (#37207294)

I'm sure it has.. considering who wrote the rules, it's easy to see how none were broken.. There will be much much noise and outrage, and then... nothing.. It's hardly worth reporting this stuff when we all know nothing will come of it. The system will stand strong as ever.

Re:has kept records in accordance with the law (1)

chill (34294) | about 3 years ago | (#37208512)

In this case, the rules were written by NARA [archives.gov] . And I speak from personal experience in this subject when I say they are truly Byzantine.

I've asked our records management attorneys a few times the simple questions of "is this a record" and "how long do I have to retain it". I usually leave in a daze and still don't know.

Re:has kept records in accordance with the law (1)

countertrolling (1585477) | about 3 years ago | (#37209568)

I certainly hope you're not being set up...

Re:has kept records in accordance with the law (1)

chill (34294) | about 3 years ago | (#37209736)

No. I've so far defaulted to "keep EVERYTHING" until I can get -- in writing -- an opinion otherwise.

Currently covered in Rolling Stone as well (1)

Provocateur (133110) | about 3 years ago | (#37207302)

Full article on their paper edition, appetizer here http://www.rollingstone.com/politics/news/is-the-sec-covering-up-wall-street-crimes-20110817 [rollingstone.com] but don't eat anything heavy prior to reading.

Re:Currently covered in Rolling Stone as well (1)

xMrFishx (1956084) | about 3 years ago | (#37207752)

Plus One Interesting.

Re:Currently covered in Rolling Stone as well (1)

Grishnakh (216268) | about 3 years ago | (#37208434)

I'm surprised Obama and the rest of the government haven't done anything to silence Rolling Stone.

Can we blame Obama? (0)

SoupGuru (723634) | about 3 years ago | (#37207398)

I didn't RTFA nor do I really know anything about the issue at hand. I'm just wondering if we get to blame Obama for this.

Re:Can we blame Obama? (1)

TheReaperD (937405) | about 3 years ago | (#37207656)

Just because he had nothing to do with it doesn't mean you can't blame him!

Re:Can we blame Obama? (0)

Anonymous Coward | about 3 years ago | (#37208472)

Yeah, just look at what Bush got (and is still being) blamed for.

Re:Can we blame Obama? (1)

Grishnakh (216268) | about 3 years ago | (#37208596)

I know you're trying to make a joke, but the answer is yes.

Just ask yourself this question: what has Obama done to FIX the situation?

When the answer is "nothing", then yes, you can blame him for the problems, whether it's with the SEC, the TSA, or anything else that's part of the Executive branch. When you're the boss, the buck stops with you.

Hiding behind the law (0)

Anonymous Coward | about 3 years ago | (#37207548)

Is it just me or when any organization say they acted "in accordance with the law" in circumstances such as this, it actually sounds like a confirmation they did something wrong?

Re:Hiding behind the law (1)

h4rr4r (612664) | about 3 years ago | (#37207604)

Of course it is. It means they did something "wrong" and probably violating the spirit of the law but technically within it.

Fixed that for ya... (1)

Jawnn (445279) | about 3 years ago | (#37207740)

"The SEC insists it has kept records in accordance with the law on its computer system".
Yeah, right.
Perhaps that should read more like... "Some non-technical SEC suit, with neither the insight nor expertise required to make such pronouncements, said 'The SEC insists it has kept records in accordance with the law on its computer system.'"

A symptom of the "revolving door" (1)

MetalliQaZ (539913) | about 3 years ago | (#37207842)

When a revolving door exists between corporate powers and government, then this kind of distasteful behavior should be expected. The solution should be to create a system at the government regulator that makes it impossible. Destroying records? Create a system that logs all work, always. Make it so, in order to do their jobs, employees must leave a trail of documentation that is automatically stored with an agency outside their control.

Hang em with their own rope (1)

Bob the Super Hamste (1152367) | about 3 years ago | (#37207898)

I say hang em with their own rope. I am sure that the SEC has various fines and what not it can impose on corporations for each instance of the actions that they have been hit with. I say let them play by their own rules. No I don't want to see the SEC go away but would like them to actually do their job. They should go after individuals who ordered or where compliant in the data destruction.

Bent as fuck. (1)

MrL0G1C (867445) | about 3 years ago | (#37207938)

"The SEC exists to set a tough example on corporate governance, and it fines banks heavily for both lax practice and deliberate malpractice.".. I laughed out loud when I read this because the truth is that the SEC is currently there to let financial wrong-doers off the hook and to act as as employment agency for wannabe-wall-streeters.

See this shocking article: (print version)
http://www.rollingstone.com/politics/news/the-real-housewives-of-wall-street-look-whos-cashing-in-on-the-bailout-20110411?print=true [rollingstone.com]

I love the Senate demand for an explanation... (1)

P. Legba (172072) | about 3 years ago | (#37208098)

"Explanation: We're doing what we've been instructed to do by Big Money interests in government for the last 30 years."

Mary Schapiro and Madoff (3, Interesting)

j. andrew rogers (774820) | about 3 years ago | (#37208134)

One of the questions raised when Obama appointed Mary Schapiro to run the SEC was the fact that she was the party responsible for minimizing oversight, actively ignoring whistleblowers, in the Madoff case. While the media was disinterested in her appointment to head the SEC it raised some eyebrows in the financial community given that she was largely responsible for the non-investigation of Madoff in her previous roles.

It is not unreasonable to suggest that the current SEC has significant self-interest in destroying the paper trail in the Madoff case. From outward appearances it reflects gross incompetence on the current head of the SEC in the best case and many would raise the specter of malfeasance.

Federal Records Regulations to Blame (1)

FurtiveGlancer (1274746) | about 3 years ago | (#37208166)

Federal records regulations are broad and rather simple. If material doesn't meet a specific condition for retention, such as an open investigation, then it must be destroyed within a specified time frame, based on the content of the material. These rules were developed when paper was the primary medium of storage.

To paraphrase: "Never attribute to malice that which is adequately explained by bureaucracy."

Re:Federal Records Regulations to Blame (1)

dave562 (969951) | about 3 years ago | (#37208974)

Yet in this case the SEC had an agreement with (I believe) the National Archives to maintain all of the documents that they destroyed. In fact they had to make special requests to have the documents destroyed earlier than they otherwise would have been. The details are in the Rolling Stone article.

Advertisement for this Slashdot article (1)

MobyDisk (75490) | about 3 years ago | (#37208842)

Ironically, the Slashdot ad in the upper-left of my screen is for a document shredding company.

"SHREDX: THE WRONG SHREDDING SERVICE CAN BE MORE EXPENSIVE THAN YOU KNOW"

Same crap as with Fukushima (1)

gweihir (88907) | about 3 years ago | (#37208904)

Japanese nuclear auditors and regulators getting cushy jobs later in the nuclear industry. This always blows up sooner or later and the price to pay always is gigantic. There is a _reason_ these regulators and auditors exist, namely to prevent the inevitable blow-up.

For them to be corrupt is treason at best. Life without parole is too good for these corrupt and evil scum.

Quis custodiet ipsos custodes (1)

lolococo (574827) | about 3 years ago | (#37209846)

Now who will guard the guardians? Another corrupt corporation, sold out to the financial industry? When will we understand that, ultimately, all these so-called warchdogs are accountable to us, the people?

They always say "don't take it personally"so we don't have to face the fact it's our money and our life they are embezzling and disappearing into their pockets. Well, when it's about my money or my life, that's personal enough to me, so I take it personally and I say everyone should consider doing the same and making it known, and demand accountability for all these fuckers.

Goose...gander (1)

argStyopa (232550) | about 3 years ago | (#37210218)

The NSF just exonerated Michael Mann for doing the same thing with climate data, I'm not sure why the SEC wouldn't be allowed to do it too?

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