May 1, 2010
COMMENTARY: SEC and Congress Knew About Porn Problems in Nov. 2008
By Rene A. Henry
Seattle, WA (HNN) – The furor in the news about senior employees of the Securities and Exchange Commission watching pornography instead of doing their jobs is not new news. It was first disclosed in the semi-annual SEC Inspector General’s September 2008 report to Congress that was made public the day after Thanksgiving.
Public anger should be why nothing has been done to resolve the problem? Or did members of Congress even read the report? And, why did the mainstream media sit on this story all these months?
In order to avoid any appearance of hypocrisy, SEC Commissioner Mary Shapiro needs to bring her own agency into compliance and clean house before pursuing fraud charges against Goldman Sachs, or any organization for that matter.
It is a disgrace that senior level employees at a regulatory agency, earning salaries as much as $222,418, whose mission was to “protect investors and maintain fair, orderly and efficient markets” not only did not do their jobs, but misused federal resources. Every month new evidence is made public of malfeasance at the SEC. Time and again whistle blowers and others took solid evidence of illegal activities to the agency which did nothing.
It is obvious the SEC employees, some of whom were lawyers and accountants, followed Nero’s advice, who fiddled while Rome burned. They watched pornography while the nation’s economy and financial system crumbled.
The image of federal employees taking taxpayer paid salaries and benefits instead of regulating and enforcing tarnishes the reputation of all federal employees. “It’s reckless and indicates a contempt for the taxpayer and the taxpayer’s interest in monitoring financial markets,” Peter Morici, a University of Maryland professor told ABC News last week.
Many of the 31 major offenders are still on the job at SEC and more than half earn over $100,000. John Nester, who receives a public salary to communicate as the SEC spokesperson, would not comment to James Gordon Meek of the New York Daily News. But he may have been ordered by SEC lawyers to not comment. These are the same lawyers who failed in their jobs to regulate our financial investments.
“The offenders were selfish and stupid but if they do it right, the SEC can turn this around,” said Michael W. Robinson, senior vice president of Levick Strategic Communications in Washington, D.C. “They need to be as hard on these employees as they can be –- and as they are on the companies they are now punishing. The SEC needs to look aggressive and proactive and lead by example.” Robinson was the spokesman for the SEC when he was director of public affairs 2001-2002.
Other federal agencies are not as lenient as the SEC in the way employees are dealt with who watch pornography on the job. At some, termination is immediate and appeals have been upheld in federal courts. I asked a retired senior executive, who was the former head of human resources at two federal agencies where he served for 35 years, what the SEC needs to do. “There are three keystones to disciplinary action,” he said. “ I believe swift removal is in order.”
1. “Is the offense actionable? Yes, definitely, because it affected the “efficiency of the service.” There is a definite nexus between their conduct and the ability/inability of the SEC to do its job.
2. “Is there proof? I would think that the computer memories would be hard physical proof as well as statements from those who observed the conduct.
3. “What is the appropriate discipline? The seriousness of the act is a major consideration. The fact that these individuals were in positions of trust and held to a higher standard is another. The notoriety is another since the widespread report of these acts affects the integrity of the SEC and public confidence in the agency. There were no mitigating circumstances and no amount of remorse could outweigh the harm.”
He notes that there is an even bigger disciplinary issue. “What about the supervisors who should have acting much, much earlier to stop the waste and abuse? In my opinion they were clearly negligent and should be held accountable. A next step would be to determine if the actions of the individuals rise to the level of fraud, by accepting money for not working,” he added. “The fraud may warrant criminal charges and the Department of Justice should be brought in to determine if they want to prosecute the individuals. This would be a decision for the U.S. attorney.” He also suggest that the SEC could refer the facts on the lawyers involved to the State Bar Association to make a determination on disbarment based upon the facts and the standards of conduct.
A copy of the 95-page report by H. David Kotz, SEC Inspector General, can be viewed at http://www.sec-oig.gov/Reports/Semiannual/2008/seminov08.pdf.
Members of Congress were outraged during hearings with Goldman Sachs because the senior executives did not accept responsibility or show any regret. Now is the time for Commissioner Shapiro to lead by example, clean her own house and apologize for the SEC.
Charleston, WV native Rene A. Henry is an author and writer who lives in Seattle. He suggests his latest book, "Communicating In A Crisis", should be a must read for the SEC Commissioner and her senior staff. During his professional career he served at the U.S. Departments of Labor, State, and Agriculture the Environmental Protection Agency. For David M. Kinchen's review of "Communicating In A Crisis" click: http://archives.huntingtonnews.net/columns/080930-kinchen-columnsbookreview.html.
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COMMENTARY: SEC and Congress Knew About Porn Problems in Nov. 2008
By Rene A. Henry
Seattle, WA (HNN) – The furor in the news about senior employees of the Securities and Exchange Commission watching pornography instead of doing their jobs is not new news. It was first disclosed in the semi-annual SEC Inspector General’s September 2008 report to Congress that was made public the day after Thanksgiving.
Public anger should be why nothing has been done to resolve the problem? Or did members of Congress even read the report? And, why did the mainstream media sit on this story all these months?
In order to avoid any appearance of hypocrisy, SEC Commissioner Mary Shapiro needs to bring her own agency into compliance and clean house before pursuing fraud charges against Goldman Sachs, or any organization for that matter.
It is a disgrace that senior level employees at a regulatory agency, earning salaries as much as $222,418, whose mission was to “protect investors and maintain fair, orderly and efficient markets” not only did not do their jobs, but misused federal resources. Every month new evidence is made public of malfeasance at the SEC. Time and again whistle blowers and others took solid evidence of illegal activities to the agency which did nothing.
It is obvious the SEC employees, some of whom were lawyers and accountants, followed Nero’s advice, who fiddled while Rome burned. They watched pornography while the nation’s economy and financial system crumbled.
The image of federal employees taking taxpayer paid salaries and benefits instead of regulating and enforcing tarnishes the reputation of all federal employees. “It’s reckless and indicates a contempt for the taxpayer and the taxpayer’s interest in monitoring financial markets,” Peter Morici, a University of Maryland professor told ABC News last week.
Many of the 31 major offenders are still on the job at SEC and more than half earn over $100,000. John Nester, who receives a public salary to communicate as the SEC spokesperson, would not comment to James Gordon Meek of the New York Daily News. But he may have been ordered by SEC lawyers to not comment. These are the same lawyers who failed in their jobs to regulate our financial investments.
“The offenders were selfish and stupid but if they do it right, the SEC can turn this around,” said Michael W. Robinson, senior vice president of Levick Strategic Communications in Washington, D.C. “They need to be as hard on these employees as they can be –- and as they are on the companies they are now punishing. The SEC needs to look aggressive and proactive and lead by example.” Robinson was the spokesman for the SEC when he was director of public affairs 2001-2002.
Other federal agencies are not as lenient as the SEC in the way employees are dealt with who watch pornography on the job. At some, termination is immediate and appeals have been upheld in federal courts. I asked a retired senior executive, who was the former head of human resources at two federal agencies where he served for 35 years, what the SEC needs to do. “There are three keystones to disciplinary action,” he said. “ I believe swift removal is in order.”
1. “Is the offense actionable? Yes, definitely, because it affected the “efficiency of the service.” There is a definite nexus between their conduct and the ability/inability of the SEC to do its job.
2. “Is there proof? I would think that the computer memories would be hard physical proof as well as statements from those who observed the conduct.
3. “What is the appropriate discipline? The seriousness of the act is a major consideration. The fact that these individuals were in positions of trust and held to a higher standard is another. The notoriety is another since the widespread report of these acts affects the integrity of the SEC and public confidence in the agency. There were no mitigating circumstances and no amount of remorse could outweigh the harm.”
He notes that there is an even bigger disciplinary issue. “What about the supervisors who should have acting much, much earlier to stop the waste and abuse? In my opinion they were clearly negligent and should be held accountable. A next step would be to determine if the actions of the individuals rise to the level of fraud, by accepting money for not working,” he added. “The fraud may warrant criminal charges and the Department of Justice should be brought in to determine if they want to prosecute the individuals. This would be a decision for the U.S. attorney.” He also suggest that the SEC could refer the facts on the lawyers involved to the State Bar Association to make a determination on disbarment based upon the facts and the standards of conduct.
A copy of the 95-page report by H. David Kotz, SEC Inspector General, can be viewed at http://www.sec-oig.gov/Reports/Semiannual/2008/seminov08.pdf.
Members of Congress were outraged during hearings with Goldman Sachs because the senior executives did not accept responsibility or show any regret. Now is the time for Commissioner Shapiro to lead by example, clean her own house and apologize for the SEC.
Charleston, WV native Rene A. Henry is an author and writer who lives in Seattle. He suggests his latest book, "Communicating In A Crisis", should be a must read for the SEC Commissioner and her senior staff. During his professional career he served at the U.S. Departments of Labor, State, and Agriculture the Environmental Protection Agency. For David M. Kinchen's review of "Communicating In A Crisis" click: http://archives.huntingtonnews.net/columns/080930-kinchen-columnsbookreview.html.
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