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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.

  • James

    Very interesting. An SEC attorney blows the cover of an individual while investigating a case, the Inspector General for the SEC highlights this violation and a court does not pursue the case? What is wrong with this picture. Hopefully the fact that the case gets reopened will bring real exposure.

    This case should be front page news on the Wall Street Journal and every other periodical in the country.

    • Stephanie Little

      Hi, James. It’s not front page news because although Larry says “today” twice — as I commented separately — he links to a Politics Daily story from a year and a half ago. Note the url date: http://www.politicsdaily.com/2010/01/28/long-island-congressional-candidate-cited-for-giving-up-jpmorgan/

      One can only assume Mr. Doyle will issue an immediate apology and withdraw this silly smear, seeing as Demos was exonerated. I didn’t vote for him in the last go-round, but there must be something to a guy that people will stoop so low to destroy.

      • LD

        Stephanie,

        You are obviously not aware that those gray bars refer to a quote from a prior article as I referenced. Is that overly difficult to understand?

        In regard to being exonerated, then why was the case just reopened which is the point of this article.

        If the case is thrown out, dismissed, or otherwise adjudicated on Mr. Demos’ behalf, you can rest assured I will highlight that fact.

        Smear? Come on. I don’t think so.

  • Stephanie Little

    “Truth, transparency, and integrity.”

    Really? You are going to dare promote yourself as embodying these virtues when you cite “today” here twice: “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.”

    But the article you link to at the left-wing Politics Daily is from a year and a HALF ago, sir. You can see the date clearly here in the URL: http://www.politicsdaily.com/2010/01/28/long-island-congressional-candidate-cited-for-giving-up-jpmorgan

    What a disgrace. Writing like this makes me wonder if you have a chip on your shoulder over the SEC pushing you out at JP Morgan and what role you played in the failure of Bear Sterns.

    Sure, I have no evidence either. But apparently all someone needs to do is make the charge, right, Larry?

    Read more: http://www.businessinsider.com/a-chance-to-expose-the-wall-street-washington-incest-2011-6#ixzz1ObfKFDK9

    • LD

      Stephanie,

      Welcome to Sense on Cents. I hope you like what you find and will stay a while. Getting off to a bit of an aggressive start but that is ok, I like people who challenge me.

      I clearly stated

      “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,”

      What part of “revisit” and “in late January 2010″ do you not understand?

      Did I repeat the word “today” in my commentary originally posted back in early 2010? Is that worthy of a demerit? If so, duly noted and accepted. If that is the worst of my transgressions, I think I’m probably doing ok.

      In regard to your other points, let’s continue to navigate.

      I am well aware of the date of my original commentary and that of the articles from POGO and Politics Daily. The “simple” fact is this story has been going on for a fairly long time. Not sure of your point there.

      Let’s continue.

      Chip on my shoulder? Don’t think so but always open to constructive criticism. I left JPM of my own accord in 2006 and had long since left Bear Stearns (late 1996) prior to its demise.

      Where is your critique of the SEC’s Inspector General’s own admission that Demos violated SEC rules? That is the key point of this commentary.

      How did you miss it?

      Come on now, if you are going to put this much effort into a comment, at least get close to hitting the key point.

      Don’t be bashful…what else do you have to say??

      Welcome Aboard and bring some friends!!

    • POGO

      From POGOs own website today we learn,

      As the SEC Finalizes Its Whistleblower Rules, One Whistleblower’s Fight for Justice Continues

      By MICHAEL SMALLBERG and ADAM ZAGORIN
      The Securities and Exchange Commission (SEC) recently approved final rules to implement a vastly improved whistleblower award program mandated by the Dodd-Frank financial reform legislation. Under this legislation and the final rules, the SEC generally cannot “disclose information that could reasonably be expected to reveal the identity of a whistleblower.”

      If the program has any chance of succeeding, whistleblowers must have confidence in the SEC’s ability to protect their confidentiality. Just ask Peter Sivere.

      Last year, we wrote in Politics Daily about Sivere’s experience when he came to the SEC in 2004 with what he described as “confidential” evidence of wrongdoing by his employer, JPMorgan Chase. He received a response from George Demos, an enforcement attorney in the SEC’s New York office, who assured Sivere that the SEC’s investigation would be kept confidential.

      However, Demos turned around and disclosed non-public information about Sivere to JPMorgan’s counsel, who then used the information to attack Sivere’s whistleblower credentials, according to a 2009 investigative report issued by the SEC Office of Inspector General (OIG). (Although Demos’s name was redacted in the report, documents obtained by POGO confirmed that he was the attorney cited in the OIG’s investigation.)

      The OIG recommended that the SEC consider taking disciplinary action against Demos, but no action was taken, as confirmed by a recent letter sent from SEC Chairman Mary Schapiro to House Oversight and Government Reform Committee Chairman Darrell Issa (R-CA) that included an update on the SEC’s response to OIG disciplinary recommendations. In fact, Demos left the SEC and announced that he was running for Congress, touting his service as an SEC enforcement attorney.

      The SEC may have let Demos off the hook, but Sivere has pressed on in his fight to hold Demos accountable. He recently filed a complaint before a New York state judicial body alleging that Demos violated the rules of professional conduct for New York attorneys. In May 2010, the Grievance Committee for the State of New York’s Tenth Judicial District told Sivere it had dismissed the complaint against Demos, but it was unclear whether a credible investigation had ever been conducted.

      This morning, Larry Doyle at Sense on Cents posted a letter from the Clerk of the New York State Supreme Court stating that the investigation has now been re-opened and transferred to a different department. The letter, dated June 1, 2011, states that “[t]he investigation was initially disposed of by the Grievance Committee for the Tenth Judicial District, but upon further review, it was decided that the matter should be re-opened but transferred to another department….in order to avoid the appearance of impropriety.”

      We hope that a thorough investigation will finally be conducted into the allegations that Demos disclosed non-public information about Sivere. In the meantime, as the SEC tries to convince more whistleblowers to come forward with information on securities law violations, it is imperative that SEC officials hold employees accountable for violating the rules of the whistleblower award program. As Sivere remarked in a public comment on the SEC’s initial proposed rules, “those entrusted with investigating tips of potential fraud from whistle blowers must have the fortitude to do the right thing, not the easy thing.”

      Michael Smallberg is a POGO Investigator. Adam Zagorin is POGO’s Journalist in Residence.

      • Mark

        Hello Stephanie….hellooooo….where are you Steph? Anything to say about this POGO piece? Hello….anybody home?

        Hmmmmmm…..

  • Tom

    How about if we just put the SEC IG David Kotz on the stand and tell us all exactly what he learned and why he cited Demos for violating SEC rules?

    Would that work for you Stephanie and for everybody else as well?

  • cru82sader

    Stephanie; What were you doing when you were supposed to be in English class at U Penn? Methinks you dost protest to much.
    Read up rather than embarrassing yourself further.
    Although your point of view is ignorantly entertaining.
    Thanks for that.

    Ed

    • Stephanie Little

      Ooooh, personal insults. How bold and brave to beat up on women. Classy. This is something called another option. As there are no facts here, it’s just partisan hack writing. We should ALL oppose this, whether it comes from the left or right, Eddie.

      I don’t know why you think I’m at U Penn, but someday you’ll probably be in the State Penn for rape or some form of sexual abuse.

      Hey, it’s “charges,” so that apparently makes it true on this blog!

  • Stephanie Little

    Real nice. You’d get along really well with Jared Loughner. I hope the owners of this blog will report your URL to the authorities. President Obama called for more civility in the wake of Congressman Giffords’ shooting. I guess you didn’t get the memo.

    • LD

      Stephanie,

      Your point here is well taken. Under the terms of the Disclaimer linked above,

      I look for active engagement at Sense on Cents. Because I value your thoughtful opinions, I encourage you to add comments to this discussion. The broader the perspectives, the more everybody benefits. In that spirit of invitation, the only rules here are mutual respect and tolerance with no off-color language. Note that tasteless and insulting comments may be deleted. Any personal remarks and attacks may be deleted. The same holds true for off-topic comments.

      As such, this comment you reference has been deleted.

    • LD

      Stephanie,

      President Obama has also called for increased transparency.






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