The following quote is drawn from the SEC Inspector General's (IG) finding in the "alleged" $7 billion ponzi scheme committed by Allen Stanford. To add insult to injury, the report ascribes the finding to the Fort Worth, Texas office, as if there was a remote and isolated instance of disregard on the enforcement teams part in that office. The full report can be found in PDF format HERE.
"The OIG investigation found, however, that the Enforcement staff [of the SEC] completely disregarded the investment adviser examiners’ concerns in deciding to close the Stanford MUI, and there was no evidence that the Enforcement staff even read the investment advisers’ 1998 examination report. Notwithstanding this lack of Enforcement action, by the summer of 1998, it was clear that both the investment adviser and broker-dealer examiners 'knew that [Stanford] was a fraud.'"
SEC Office of Inspector General, "Investigation of the SEC’s Response to Concerns Regarding Robert Allen Stanford’s Alleged Ponzi Scheme," Case Number OIG-526, page 27, March 31, 2010. accessed online April 16, 2010.
The fact that the findings of this report was issued 3 hours after the charging of Goldman Sachs (GS) of fraud brings into question the legitimacy of the SEC's willingness to take these matters seriously. To be blunt, I think the Goldman charges are a PR ploy to draw attention away from the Stanford failure.
Useful Resources:
- Our 2008 quip on Hank Paulson and Goldman Sachs
- SEC v. Goldman Sachs & Co. and Fabrice Tourre (PDF)
- SEC OIG report on Robert Allen Stanford (PDF)