Um, Official Corruption At The SEC?



The U.S. Securities and Exchange Commission’s internal watchdog is reviewing an allegation that Robert Khuzami, the agency’s top enforcement official, gave preferential treatment to Citigroup Inc. executives in the agency’s $75 million settlement with the firm in July.

Inspector General H. David Kotz opened the probe after a request from U.S. Senator Charles Grassley, an Iowa Republican, who forwarded an unsigned letter making the allegation. Khuzami told his staff to soften claims against two executives after conferring with a lawyer representing the bank, according to the letter. Jon Diat, a Citigroup spokesman, declined to comment.

Oh really? 

After “conferring”?  Is this in the public record somewhere?  What this “conference” was about, perhaps a set of minutes of said meeting?

According to the letter, the SEC’s staff was prepared to file fraud claims against both individuals. Khuzami ordered his staff to drop the claims after holding a “secret conversation, without telling the staff, with a prominent defense lawyer who is a good friend” of his and “who was counsel for the company, not the individuals affected,” according to a copy of the letter reviewed by Bloomberg News.

Oh I see.  That sounds somewhat like the sort of “preference” that the OTS gave IndyMac bank, when they decided to backdate some deposits, and one of the OTS folks working with them actively allowed it.

Why was that so important?  Because the same person had done so during the S&L crisis, and kept his job after that incident!

Oh, and incidentally, Grassley promised an “investigation” of that too. 

What came of it?  Nothing.

Zerohedge has managed to dig up some financial disclosures from this “gentlemen” that make quite a damning case – and implicate possible malfeasance (or worse) in other cases related to banks – especially Deutsche Bank.

Of course given the proclivity of our government and it’s so-called “regulators” to permit theft from the public in plain sight of the police, much like my experience in NY City more than a decade ago when drug peddlers were attempting to sell me narcotics within five feet of a uniformed city police officer, I have absolutely zero confidence that anything approaching an indictment and prosecution will be forthcoming.

The message?

Steal anything that’s not nailed down – the SEC doesn’t give a damn and neither does Congress, despite all the strum and furor they claim when the press – including bloggers like myself and Zerohedge, dig up the facts.

Discussion (registration required to post)