SEC sought wrist slap for crony Citigroup, Judge Rakoff calls out Mary Shapiro for trying to shield Citi from lawsuits

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11/29/11, "Judge disses SEC," NY Post, K. Whitehouse

"Rakoff: $285M Citi deal ‘shortchanges’ investors"

"Securities and Exchange Commission chief Mary Schapiro was given an embarrassing public lashing yesterday by a Manhattan federal judge who ruled that she took the easy way out of a disquieting regulatory action against Citigroup.

Last month, the SEC sued the nation’s third-largest bank for dumping a doomed $1 billion toxic mortgage product on unknowing customers while bank higher-ups were betting that half the assets within the collateralized debt obligation, or CDO, to fail.

Yesterday, Judge Jed Rakoff squashed Schapiro’s plans to sweep the tawdry lawsuit under the carpet for a mere $285 million settlement, saying the SEC-Citi deal failed to provide him with a “framework” for determining Citigroup’s guilt.

At issue is the settlement’s boiler-plate language protecting Citigroup from admitting or denying wrongdoing.

““As a matter of law, an allegation that is neither admitted nor denied is simply that, an allegation,” Rakoff said in his 15-page ruling, released yesterday.

The judge told the two opposing sides that unless they can both agree on whether Citi was actually in the wrong, they will have to duke it out before jury of their peers next July. The judge noted that he has “little real doubt that Citigroup contests the factual allegations.”...

If Citi is found guilty, the verdict will be used to support pile-on lawsuits by burned customers. The squashed settlement, by contrast, would have shielded the bank from lawsuits relying on the SEC’s findings — an issue that seemed to particularly rankle Rakoff."...

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12/8/10, "SEC porn peepers' names to be kept secret," Washington Times, Jim McElhatton

"A federal judge has ruled in favor of protecting the identities of U.S. Securities and Exchange Commission employees caught surfing for pornography on their government computers, saying privacy interests win over the public's right to know.

In a ruling Tuesday, U.S. District Judge Christine M. Arguello in Denver also

• called the public's interest in the SEC employees' identities "negligible, at best."

"Disclosure in this case is not limited to the reputational embarrassment of having misused government property on official time, but rather extends to the embarrassment resulting from public knowledge that the conduct was of a sexual nature,"

• Judge Arguello, a 2008 appointee of President Bush, said in the 26-page ruling.

The ruling came in response to a lawsuit by a Denver law firm that sought to overturn an SEC decision to keep private the names and job descriptions of SEC supervisors caught searching for porn at work....

In February, The Times reported on investigative case summaries obtained through the Freedom of Information Act and other records detailing about two dozen SEC employees and contractors who faced internal investigations for viewing pornography at work.

Among the cases was

• an enforcement branch chief suspended for one day after
  

• being caught looking up
  

• sex websites nearly 300 times over a two-month period.

In supplying the records, officials at the SEC's Office of Inspector General declined to release to The Times the names of those investigated, saying, among other reasons, that disclosure could subject employees to "harassment and annoyance in the conduct of their official duties and private lives."...

• Mr. Doe also said disclosures would "devastate my spouse and children as well as my extended family, and likely cause extreme harm to my family relationships."

But Mr. Evans argued in court papers that "there simply is no privacy interest associated with surfing porn on SEC computers during SEC work hours, particularly when these employees have admitted that

• they understood at the time they engaged in this activity that they were
  
• violating SEC policy and rules, as well as governmentwide standards of conduct."...

"It is about the intentional, purposeful and repeated misuse and abuse of the public trust and government/public property and resources by at least 24 SEC employees and employees of seven government contractors," he argued in court."

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• Obama's bank bill goes further, making all activities of the SEC exempt from public disclosure even by FOI:
  

7/28/10, "SEC says new financial regulation law exempts it from public disclosure," Fox Business News, by Dunstan Prial

• "So much for transparency.

Under a little-noticed provision of the recently passed financial-reform legislation, the Securities and Exchange Commission

no longer has to comply with virtually all requests for information releases from the public, including those filed under the Freedom of Information Act.

The law, signed last week by President Obama, exempts the SEC from disclosing records or information derived from "surveillance, risk assessments, or other regulatory and oversight activities." Given that the SEC is a regulatory body,

• the provision covers almost every action by the agency, lawyers say. Congress and federal agencies can request information, but the public cannot.

That argument comes despite the President saying that one of the cornerstones of the sweeping new legislation was more transparent financial markets. Indeed, in touting the new law, Obama specifically said it would “increase transparency in financial dealings."...

“The next time there

• is a Bernie Madoff failure the American public will not be able to obtain the SEC documents that describe the failure,”
  

referring to the shamed broker whose Ponzi scheme cost investors billions."...

• Reference: 4/29/10, Freedom of Information Act documents were the only way taxpayers (who pay SEC salaries) had of finding out that even high level SEC employees were spending enormous amounts of time viewing porn. And that not one person has been fired as a result. Now it will be illegal for us who pay SEC salaries to know what they are doing on the job:

Washington Times: "The (SEC) attorney had looked up sex websites nearly

• 300 times, also over a two-month period. But his job appeared safe, too,
  

• after SEC management proposed a one-day suspension, records show.

Details about the sanctions are contained in reports to Congress and records obtained by The Washington Times through the Freedom of Information Act."...

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2/10/10, "SEC guidance a boost for carbon disclosure," by Climate, Inc.

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