So, This is What the SEC Does

Today, the SEC announced it was bringing insider trading charges against Mark Cuban.  He sold a large position in Mamma.com (some lousy search engine) with some insider info and saved himself about $750,000 in losses.  The big part of this dispute is that the SEC says he pledged to keep the information confidential and therefore could not act on it.  Cuban says he never said anything about confidentiality, and therefore could trade with the knowledge he had.

Not that it really matters, but the information was that the company was going to do a PIPE the next day.  A PIPE is “Private Investment in Public Entity” which means they sell a number of shares to private investors to raise money.  The disadvantage is that it dilutes the amount of shares outstanding, which in turn makes each share worth less.  So, Cuban sold his shares before the announcement of the PIPE and the subsequent decline.  He sold only a portion of his position and saved himself $750,000 by selling early.

This was all done back in 2004 too!  They spent 4 years researching this?  You have to be kidding me!  What a waste of taxpayer dollars and government resources.

While the entire financial system is crumbling and hundreds of billions of dollars in shareholder equity has been lost and we’re printing trillions of dollars as well, the SEC is investigating a deal by Mark Cuban that equated to less that ONE MILLION dollars?

This is our government in a nutshell.  Instead of going after the CEOs of the financial institutions that wrecked our economy, they go after Mark Cuban for $750,000.  The decisions by the heads of subprime lenders and Wall Street firms that securitized and sold these assets have cost us all billions of dollars.  How can there not be any investigations into these firms?  What a joke!

What about AIG?  They got bailed out to the tune of $85 billion and then sent employees on a luxury retreat that cost over $400,000!  That’s our money!  Cuban’s trade, while it was unethical if not illegal, was his own money and mainly benefitted himself.  AIG was using taxpayer money to pamper themselves.  Where are the fines for this?  Why isn’t anyone in jail yet?

The SEC needs to look at the CEOs and officers of Goldman, Merrill and any other big Wall Street firm.  I can bet that they had “planned” sales that happened to occur right before a drop in stock price.  Just because it’s “planned” doesn’t mean they were not setting up these sales with inside knowledge.

We should all be outraged that during this time of crisis, the SEC is busy investigating Mark Cuban for three quarters of million dollars.  The top 100 employees at any of these investment banks were getting bonuses many times the money Cuban saved himself.  These bonuses were created by financial instruments like mortgage backed securities, that the SEC was supposed to regulate.  Now look who is footing the bill – the average Joe.

If they really want to crack down, they should go back and put every exectutive of an investment bank or subprime lender or AIG in jail right now.  Christopher Cox, the head of the SEC should be forced to resign as well.  He just let all this happen and then has the gall to go after Cuban.  His lack of leadership is criminal in itself.

Of all the “change” Obama wants, the first one he should make is to get the SEC to actually do it’s job and not try to make martyrs out of celebrities.

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One Response to “So, This is What the SEC Does”

  1. Subprime Showtime Says:

    I couldn’t agree more – they should shut down the SEC, put Cox in jail and start afresh with a agency that’s not corrupt.

    http://subprimeshowtime.com/2008/12/18/time-to-disband-the-sec/

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