Posted on 05/25/2007 8:06:25 PM PDT by GBeanie
I need a hand here.
In 1995, the SEC issued an investigative report on price-spread manipulation and other broker/dealer nastiness. Nothing new there. They fined NASDAQ 25 million dollars, gave them a time-out, and sent them to bed without dessert. I have a copy of that report.
The verbal description of the indescretions made the dealers out to be vile and vulgar robbers of children's piggy banks, but, the financial services industry is the largest campaign donation sector in the US, and what should have been a hanging offense (after the drawing-and-quartering), was turned into a very light tap on the wrist. In the report, the SEC allowed NASDAQ to use the fine money to upgrade their computer systems. Now there's a deterrent to bad behavior if ever I saw one. After examining the footnotes with a magnifying glass, I discovered that the commissioners had second thoughts about the harshness of the fine and decided that if NASDAQ had any difficulty paying the fine, they could appeal it. My bet here is that NASDAQ never paid a nickel for their criminal conduct.
Reading the headlines and not having a dog in the fight, Janet Reno announced her own Justice Department would launch a separate investigation into the Wall Street scandals and criminal activities. She made some hay over this for the next several years in various incarnations, but did manage to grab the spotlight and a few page one headlines with her claim that all of the top brokerage houses had been operating in a 'culture of fraud for several generations.' I have a copy of an article on the report buried somewhere on my E:\ drive. She named the top 25 brokerage houses involved in the fraud and all the biggies were present and accounted for.
Then, in typical political 'Don't touch the doners' fashion, she sat them on a stool facing the corner, made them raise their right hands, and solemly promise never, ever, ever, to do it again on their best Cat's Eye Tau (big 'shooter' marble). Then the brokerage houses were allowed to write their own punishments, without admitting guilt, of course, Janet claimed VICTORY, and the pols were happy, the brokers were happy, Janet was all smiles for the cameras, and the only unhappy campers left in Dodge were the naked sheep getting cold without their wool. Not a dimel changed hands, and no one spent even a day in the clink. Ain't Washington wunnerful?
My problem here is that I have tried several times over the years to Google the actual JD report and have not been able to come up with it. Can anyone point me to an Internet source for this Justice report? Much appreciation will be beamed your way for a URL to the beast. Thankew 'gin.
GBeanie
Interesting.
how ‘bout this, you give me more details (I skimmed) and I look it up on Lexisnexis/Westlaw. Tell me some key words and dates to throw in and I’ll get it to you.
Main key words, i.e. Reno + investigation.... + date 1/2/96 - 97.
Have you contacted the Justice Department? Some things from that era are not online...and some are just hard to access because things got moved around so much in recent years.
Here's a NY Times piece on this, from May 1997.
Good point. Since the "crackdown" began in Nov. 1995, the report (original 1995) may not even be online. 1996 was a big year for the internet. Anything prior to that is the "dark years."
First get the name of the report.
You can request a copy of the report under FOIA from the U.S. Department of Justice Here:
http://www.ojp.gov/foia.htm
1995 predates the invention of fire and sliced bread...so articles from that era can be few and far between. I’ve been wanting an AP story regarding flying out some prominent Saudi families right after the OK City Bombing...and I think I am going to have to actually go to one of those library thingies to get it.
If you are talking about what I think you are talking about, there was civil litigation (class actions). I'm just a regular retail investor and received several checks for decent amounts of money.
That said, I think the cheating still goes on every minute of every trading day.
I personally know of a $325 million IPO made in 1997 in which an approx. $9 million was paid to an alleged top organized crime syndicate figure.
And yes this was done with the full knowledge of the SEC and included some of the top brokerage houses in the U.S.
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