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A Chance to Expose the Wall Street-Washington Incest

Posted by Larry Doyle on June 7, 2011 6:55 AM |

Truth, transparency, and integrity.

The compromising of these virtues may be the cost of doing business in our nation but make no mistake the price we collectively pay is enormous. Whether in Washington or on Wall Street, the ability to compromise our prized virtues has truly been raised to an art form.

From derivative transactions which disguise unprecedented levels of risk to bond indentures which require advanced legal degrees to interpret, our ‘friends’ on Wall Street with assistance from ‘their’ friends in Washington have displayed little regard for the aforementioned virtues which are the foundation for real ‘sense on cents’.

More often than not,though,the violation of our virtues is viewed in an impersonal light. Wall Street and Washington are behemoths. The American public and investors at large are faceless. In my opinion, our financial services industry and government would just as soon keep it this way.

Let’s challenge them.

The inability to personalize violations and transgressions of our virtues allows industry behaviors to perpetuate and real change to be stunted. Why does Wall Street welcome the indictments and convictions of the likes of Bernie Madoff and Raj Rajaratnam? For the very simple reason that by pinpointing selected individuals the industry as a whole can deflect attention away from the real issue and enormous costs embedded in the regulatory capture, or as I have often defined the Wall Street-Washington incest, which define these partners and suffocate our nation.

Against this amorphous backdrop, I am heartened this morning to learn that a case pinpointing two selected individuals has been reopened. Who are these individuals and what is the case? Let’s navigate and revisit a commentary I put forth in late January 2010 when I wrote SEC IG Report: George Demos Pimped Peter Sivere,

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:

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 wrote then and maintain now that I have no axe to grind with George Demos. I do not know him and have never met him. In similar fashion, I have never met Mr. Sivere and have no relationship with him as well.

Demos did not succeed in his Congressional race. During his race I did hear from an individual connected to his campaign that a complaint filed by Mr. Sivere against Mr. Demos had been dismissed. I was dumbfounded by that fact. How could any court dismiss a complaint after the SEC’s Office of Inspector General pinpointed Mr. Demos for violating  SEC rules and blowing the cover of the whistleblower Mr. Sivere? More regulatory capture? I believed as much.

Hope springs eternal, though, as we now learn from the Appellate Division of the Supreme Court of the State of New York , Second Judicial Department,

“upon further review, it was decided that the matter should be re-opened but transferred to another department.”

Our virtues have a chance. While this case is obviously most meaningful to Messrs. Sivere and Demos, I believe it holds real meaning for all of us. How so? Let’s unlock the regulatory capture on Wall Street. Let’s aerate the stench that emanates from the Wall Street-Washington incest.

I truly hope that the pursuit of real justice in this case will embrace the full truth, real transparency, and unbridled integrity so that those who care to invest in our markets know that the playing field is fair and level.

America deserves nothing less.

I am pleased to provide a copy of the statement dated June 1, 2011 which highlights the reopening of this case.

Larry Doyle

Related Commentary
Sense on Cents/Wall Street-Washington Incest

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

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