SEC Awake at the Switch…Sort Of
The SEC is accusing Goldman Sachs (GS) of screwing its own clients through lack of disclosure (see also Goldman Cheat? article), but the SEC apparently enjoys passively watching a little action itself. Throughout the financial crisis, as investors watched the collapse of major financial institutions like Bear Stearns (JPM), Lehman Brothers, and AIG, the SEC was accused of falling asleep at the switch. As it turns out, the SEC was not asleep, but rather they were quite awake switching on the porn.
Efficiency may not be the core strength of all governmental agencies (several of my horrific trips to the department of motor vehicles (DMV) can attest to that fact), but little did I know that my tax dollars were supporting six-figure salaries (some over $200,000), so SEC employees could watch skin flick classics like Pulp Friction, Spankenstein, or Buttman and Throbbin’.
I guess from a certain standpoint, one might appreciate SEC employee ingenuity and determination. For example the Associated Press reported the following:
“An accountant was blocked more than 16,000 times in a month from visiting websites classified as “Sex” or “Pornography.” Yet he still managed to amass a collection of “very graphic” material on his hard drive by using Google images to bypass the SEC’s internal filter, according to an earlier report from the inspector general.”
“A senior attorney at the SEC’s Washington headquarters spent up to eight hours a day looking at and downloading pornography. When he ran out of hard drive space, he burned the files to CDs or DVDs, which he kept in boxes around his office.”
Perhaps the SEC is just like Goldman Sachs? They both just happened to get caught, even though many others have participated in the sinful behavior. How widespread is pornography viewing in the workplace? A study conducted by Websense in 2006 reported that 16% of men with internet access admitted to watching porn during office hours.
Watching nudey movies is less damaging than allegedly misrepresenting and hiding information from investors, but Dick Fuld, Bernie Madoff, and Allen Stanford are certainly thankful to the distracted SEC staffers for the extra time the crooked Wall Streeters were given to run their schemes. Wall Street has become a lightning rod, and given the fact that 2010 is an election year, there is extreme pressure on politicians to limit the power, size, and activities of the major banks. Maybe the new regulatory reform legislation being crafted in Congress will even include a ban on workplace pornography viewing. With additional free time, the SEC may successfully find more law-breakers. Who knows, possibly Goldman could even help the government recover some lost tax revenue by auctioning off excess dirty movies left over at the SEC?
Wade W. Slome, CFA, CFP®
Plan. Invest. Prosper.
*DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients own certain exchange traded funds and in a security derived from an AIG subsidiary, but at the time of publishing SCM had no direct positions in GS, Bear Stearns (JPM), and Lehman Brothers, or any security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC “Contact” page.