Sense on Cents

Who is George Demos? A former enforcement lawyer in the New York office of the SEC, currently running for Congress from Long Island.

Who is Peter Sivere? A former compliance employee at JP Morgan.

Sivere crossed paths with Demos in 2004 while providing information related to an investigation of questionable mutual fund trading activity. In the midst of Sivere’s engagement with the SEC, his confidence was violated. I highlighted this reality the other day in writing, “The SEC Pimped Peter Sivere.”

Who at the SEC blew Sivere’s cover? Today we learn it was George Demos.

Kudos to the Project on Government Oversight (POGO) for investigating this case and kudos to Politics Daily for highlighting it today in writing, Long Island Congressional Candidate Cited for Giving up J.P. Morgan Whistleblower:

George Demos is a Republican Congressional candidate from Eastern Long Island whose Web site bears the slogan “Fighting for Freedom,” and touts his service as an enforcement lawyer in the New York office of the Securities and Exchange Commission. A bio says that he “handled some of the SEC’s most significant investigations,” including that of Ponzi scheme artist Bernard Madoff, and “worked tirelessly on the cases that never made the headlines.”

But one case that never made headlines was his own: Demos’ campaign Web site and public statements omit any reference to a report last March of the SEC’s Inspector General (IG), which found he had improperly disclosed protected, nonpublic information about a whistleblower to the counsel for that whistleblower’s employer, a major Wall Street bank, JPMorgan Chase. The IG’s charges of misconduct grew out of an SEC probe that began in 2003 of JPMorgan and other big financial institutions suspected of illegal market practices.

Demos has denied he did anything improper, and his campaign declined to comment on the matter. But documents obtained by the Project On Government Oversight (POGO) — a non-partisan non-profit based in Washington — confirm that Demos was the staff attorney who was cited in the IG report for violating SEC rules. The IG referred the case to the agency’s management for possible disciplinary action, but the SEC took no action. Soon after that, Demos quietly resigned from his job and launched his bid for a seat in the House of Representatives.

I am not writing about this case because I have any sort of axe with George Demos. If he proves himself to be the best candidate for the Congressional seat and wins the election, I hope he serves our country well. That said, voters should be aware of everything in a candidate’s professional background. The fact that Demos is promoting his involvement in the massive SEC failure of the Madoff scam is reason all by itself to doubt his intellect. (Thank you hongloan)

Nor am I writing this piece in defense of Peter Sivere. Even though our tenure at JP Morgan overlapped, I didn’t know him nor do I have any sort of personal or professional relationship with him.

I am writing to shed further light on what I deem to be the incestuous nature of the Wall Street-Washington relationship.

To whom did Demos report at the SEC? Was that individual held accountable for a failure to supervise? America deserves to know.

When financial regulatory improprieties at both the SEC and FINRA are neither exposed nor properly adjudicated, a culture of negligence and incompetence develops . . . and perpetuates. Ample evidence is readily apparent that this culture is deeply ingrained within these organizations. While SEC Chair Mary Schapiro would maintain that she and her new team at the SEC are addressing this culture, I believe strongly Schapiro is the wrong person for the job because she is a product of that culture herself.

As for George Demos, he made his bed and now he needs to sleep in it. I would recommend he lift the covers and show America what transpired – not only in this case, but within the SEC as a whole.

Now that would be a real public service.

LD

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This entry was posted on Thursday, January 28th, 2010 at 9:02 AM and is filed under General, SEC. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.