This page has been archived and commenting is disabled.
SEC & DOJ Amend Witness Immunity Rules: Hank Greenberg, AIG, Warren Buffett, Berkshire & Gen Re Continue Raping Main Street
The SEC / DoJ amend witness immunity rules 'to protect investors and the integrity of markets' ... yet, just one week after unilaterally 'updating' said rules, Hank Greenberg, AIG, Warren Buffett, Berkshire and Gen Re are each given a cursory slap on the wrist after the SEC charges General Re for its role in AIG and Prudential accounting frauds. With Warren / Berkshire (finally) yielding to a 50-for-1 Class B split, welp, something smells rather fishy in Omaha.
Having highlighted the admitted guilt of AIG, Gen Re & PRU earlier today, let us examine not only the language wrapped around each of the latest regulatory changes but also the intent within / practical application of.
Bottom line: protecting the public from egregiously rampant, market manipulating fraud sounds great; essentially letting Hank Greenberg, AIG, Warren Buffett, Berkshire and Gen Re off the hook for egregiously rampant, market manipulating fraud doesn't look so hot.
If you happened to miss this salient story in the past day, catch up on the details right here:
"SEC Charges General Re Corporation for Role in AIG and Prudential Accounting Frauds"
And hot off the presses from Tyler Durden of Zero Hedge is an excellent "AIG Timeline of Events".
SEC Announces Initiative to Encourage Individuals and Companies to Cooperate and Assist in Investigations
The new initiative establishes incentives for individuals and
companies to fully and truthfully cooperate and assist with SEC
investigations and enforcement actions, and provides new tools to help
investigators develop first-hand evidence to build the strongest
possible cases. The cooperation initiative is expected to result in
invaluable and early assistance in identifying the scope, participants,
victims and ill-gotten gains associated with fraudulent schemes.
"This is a potential game-changer for the Division of Enforcement,"
said Robert Khuzami, Director of the Division of Enforcement. "There is
no substitute for the insiders' view into fraud and misconduct that
only cooperating witnesses can provide. That type of evidence can
expand our ability to conduct our investigations more swiftly, and to
act quickly to file charges, freeze assets, and protect investors."
To improve the quality, quantity, and timeliness of information and
assistance it receives, the SEC approved the following measures:
First, the Division of Enforcement is authorizing its staff to use
various tools to encourage individuals and companies to report
violations and provide assistance to the agency. The new tools are laid
out in a revised version of the Division's enforcement manual in a new
section entitled "Fostering Cooperation." For many years, similar
cooperation tools have been regularly and successfully used by the
Justice Department in its criminal investigations and prosecutions. The
new cooperation tools, not previously available in SEC enforcement
matters, include:
-
Cooperation Agreements — Formal written agreements in
which the Enforcement Division agrees to recommend to the Commission
that a cooperator receive credit for cooperating in investigations or
related enforcement actions if the cooperator provides substantial
assistance such as full and truthful information and testimony. -
Deferred
Prosecution Agreements — Formal written agreements in which the
Commission agrees to forego an enforcement action against a cooperator
if the individual or company agrees, among other things, to cooperate
fully and truthfully and to comply with express prohibitions and
undertakings during a period of deferred prosecution. -
Non-prosecution
Agreements — Formal written agreements, entered into under limited and
appropriate circumstances, in which the Commission agrees not to pursue
an enforcement action against a cooperator if the individual or company
agrees, among other things, to cooperate fully and truthfully and
comply with express undertakings.
Second, the SEC streamlined the process for submitting witness
immunity requests to the Justice Department for witnesses who have the
capacity to assist in its investigations and related enforcement
actions.
Third, the Commission has set out, for the first time, the way in
which it will evaluate whether, how much, and in what manner to credit
cooperation by individuals to ensure that potential cooperation
arrangements maximize the Commission's law enforcement interests. This
pronouncement is expected to provide guidance and serve as an incentive
for individuals to report violations and to cooperate fully and
promptly in enforcement cases. It is similar to the so-called "Seaboard
Report" that was issued in 2001 and detailed the factors the SEC
considers when evaluating cooperation by companies.
In the newly issued policy statement, the SEC identifies four general considerations:
- The assistance provided by the cooperating individual.
- The importance of the underlying matter in which the individual cooperated.
- The societal interest in ensuring the individual is held accountable for his or her misconduct.
- The appropriateness of cooperation credit based upon the risk profile of the cooperating individual.
The developments announced today are the latest in a series of
initiatives that are part of the most significant reorganization of the
Enforcement Division in more than 30 years. These reforms include
vastly expanding staff training programs, hiring staff with new skill
sets, streamlining management, adding more experienced investigators to
the front lines, revising internal enforcement procedures,
restructuring processes to ensure better sharing of information,
leveraging the knowledge of third parties, and revamping the way tips
are handled.
* * *
For more information, contact:
Robert S. Khuzami — Director of the Division of Enforcement — (202) 551-4500
Lorin L. Reisner — Deputy Director of the Division of Enforcement — (202) 551-4500
Jordan A. Thomas — Assistant Chief Litigation Counsel — (202) 551-4475
SECURITIES AND EXCHANGE COMMISSION
17 CFR PART 200
[Release No. 34-61339]
Delegations of Authority to the Director of its Division of Enforcement
AGENCY: Securities and Exchange Commission.
ACTION: Final rule.
SUMMARY:
The Securities and Exchange Commission (“Commission”) is amending its rules to delegate authority to the Director of the Division of Enforcement (“Division”) to submit witness immunity order requests to the Department of Justice for witnesses who have provided or have the potential to provide substantial assistance in the Commission’s investigations and related enforcement actions. This delegation is intended to conserve Commission resources, enhance the Division’s ability to detect violations of the federal securities laws, increase the effectiveness and efficiency of the Division’s investigations, and improve the success of the Commission’s enforcement actions.
EFFECTIVE DATE: January 19, 2010.
FOR FURTHER INFORMATION CONTACT: Joan McKown, Chief Counsel, (202) 551-4933; or Jordan A. Thomas, Assistant Chief Litigation Counsel, (202) 5514475.
SUPPLEMENTARY INFORMATION:
The Commission today is amending its rules governing delegations of authority to the Director of the Division of Enforcement. The amendment to Rule 30-4 (17 CFR 200.30-4) authorize the Director of the Division of Enforcement (“Director”) to submit witness immunity order requests to the Department of Justice for witnesses who have provided or have the potential to provide substantial assistance in the Commission’s investigations and related enforcement actions. This delegation is intended to conserve Commission resources, enhance the Division’s ability to detect violations of the federal securities laws, increase the effectiveness and efficiency of the Division’s investigations, and improve the success of the Commission’s enforcement actions.
Nevertheless, the Division may submit matters to the Commission for consideration, as it deems appropriate.
The Commission finds, in accordance with the Administrative Procedure Act (“APA”) (5 U.S.C. 553(b)(3)(A)), that this revision relates solely to agency organization, procedures, or practices. It is therefore not subject to the provisions of the APA requiring notice and opportunity for comment. Accordingly, it is effective [insert date of publication in the Federal Register].
LIST OF SUBJECTS IN 17 CFR PART 200
Administrative practice and procedure, Authority delegations (Government agencies).
TEXT OF AMENDMENT:
For the reasons set out in the preamble, Title 17, Chapter II of the Code of Federal Regulations is amended as follows:
PART 200—ORGANIZATION; CONDUCT AND ETHICS; AND INFORMATION AND REQUESTS
1. The authority citation for Part 200, Subpart A, continues to read in part as follows:
Authority: 15 U.S.C. 77o, 77s, 77sss, 77d, 78d-1, 78d-2, 78w, 78ll(d), 78mm, 80a-37, 80b-11, and 7202, unless otherwise noted.
* * * * *
2. Section 200.30-4 is amended by adding paragraph (a)(14) to read as follows:
§ 200.30-4 Delegation of authority to Director of Division of Enforcement.
* * * * *
(a) * * *
(14) To submit witness immunity requests to the U.S. Attorney General for approval to seek an order compelling an individual to give testimony or provide other information pursuant to a subpoena that may be necessary to the public interest in connection with investigations and related enforcement actions pursuant to section 22(b) of the Securities Act of 1933 (15 U.S.C. 77v(b)), section 21(c) of the Securities Exchange Act of 1934 (15 U.S.C. 78u(c)), section 42(c) of the Investment Company Act of 1940 (15 U.S.C. 80a-41(c)) and section 209(c) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-9(c)).
* * * * *
By the Commission.
Elizabeth M. Murphy
Secretary
Date: January 13, 2010
SECURITIES AND EXCHANGE COMMISSION
17 CFR PART 202
[Release No. 34-61340]
Policy Statement Concerning Cooperation by Individuals in its Investigations and Related Enforcement Actions
AGENCY: Securities and Exchange Commission.
ACTION: Policy statement.
SUMMARY:
The Securities and Exchange Commission is issuing a policy statement announcing the analytical framework it uses to evaluate cooperation by individuals.
EFFECTIVE DATE: January 19, 2010.
FOR FURTHER INFORMATION CONTACT: Joan McKown, Chief Counsel, (202) 551-4933; or Jordan A. Thomas, Assistant Chief Litigation Counsel, (202) 5514475.
SUPPLEMENTARY INFORMATION:
The Securities and Exchange Commission is issuing a policy statement announcing the analytical framework it uses to evaluate cooperation by individuals. This framework serves two important purposes: it promotes the fair and effective exercise of discretion by the Commission, and it enhances confidence on the part of the public and cooperating individuals that decisions regarding cooperation in the Commission’s investigations and related enforcement actions will be made in an appropriate and consistent manner.
The provisions of the Administrative Procedure Act (“APA”), 5 U.S.C. 553, regarding notice of proposed rulemaking, opportunities for public comment, and prior publication are not applicable to general statements of policy, such as this policy statement. Similarly, the provisions of the Regulatory Flexibility Act, 5 U.S.C. 601-602, apply only when notice and comment are required by the APA or another statute and are therefore not applicable.
LIST OF SUBJECTS IN 17 CFR PART 202
Administrative practice and procedure.
TEXT OF AMENDMENT:
For the reasons set out in the preamble, Title 17, Chapter II of the Code of Federal Regulations is amended as follows:
PART 202—INFORMAL AND OTHER PROCEDURES
1. The authority citation for Part 202 continues to read, in part, as follows:
Authority: 15 U.S.C. 77s, 77t, 77sss, 77uuu, 78d-1, 78u, 78w, 78ll(d), 80a-37, 80a-41, 80b-9, 80b-11, 7202 and 7211 et seq., unless otherwise noted.
* * * * *
2. Add § 202.12 to read as follows:
§ 202.12 Policy statement concerning cooperation by individuals in its investigations and related enforcement actions.
Cooperation by individuals and entities in the Commission’s investigations and related enforcement actions can contribute significantly to the success of the agency’s mission. Cooperation can enhance the Commission’s ability to detect violations of the federal securities laws, increase the effectiveness and efficiency of the Commission’s investigations, and provide important evidence for the Commission’s enforcement actions. There is a wide spectrum of tools available to the Commission and its staff for facilitating and rewarding cooperation by individuals, ranging from taking no enforcement action to pursuing reduced charges and sanctions in connection with enforcement actions. As with any cooperation program, there exists some tension between the objectives of holding individuals fully accountable for their misconduct and providing incentives for individuals to cooperate with law enforcement authorities. This policy statement sets forth the analytical framework employed by the Commission and its staff for resolving this tension in a manner that ensures that potential cooperation arrangements maximize the Commission’s law enforcement interests. Although the evaluation of cooperation requires a case-by-case analysis of the specific circumstances presented, as described in greater detail below, the Commission’s general approach is to determine whether, how much, and in what manner to credit cooperation by individuals by evaluating four considerations: the assistance provided by the cooperating individual in the Commission’s investigation or related enforcement actions (“Investigation”); the importance of the underlying matter in which the individual cooperated; the societal interest in ensuring that the cooperating individual is held accountable for his or her misconduct; and the appropriateness of cooperation credit based upon the profile of the cooperating individual. In the end, the goal of the Commission’s analysis is to protect the investing public by determining whether the public interest in facilitating and rewarding an individual’s cooperation in order to advance the Commission’s law enforcement interests justifies the credit awarded to the individual for his or her cooperation.
(a) Assistance provided by the individual. The Commission assesses the assistance provided by the cooperating individual in the Investigation by considering, among other things:
(1) The value of the individual’s cooperation to the Investigation including, but not limited to:
(i) Whether the individual’s cooperation resulted in substantial assistance to the Investigation;
(ii) The timeliness of the individual’s cooperation, including whether the individual was first to report the misconduct to the Commission or to offer his or her cooperation in the Investigation, and whether the cooperation was provided before he or she had any knowledge of a pending investigation or related action;
(iii) Whether the Investigation was initiated based on information or other cooperation provided by the individual;
(iv) The quality of cooperation provided by the individual, including whether the cooperation was truthful, complete, and reliable; and
(v) The time and resources conserved as a result of the individual’s cooperation in the Investigation.
(2) The nature of the individual’s cooperation in the Investigation including, but not limited to:
(i) Whether the individual’s cooperation was voluntary or required by the terms of an agreement with another law enforcement or regulatory organization;
(ii) The types of assistance the individual provided to the Commission;
(iii) Whether the individual provided non-privileged information, which information was not requested by the staff or otherwise might not have been discovered;
(iv) Whether the individual encouraged or authorized others to assist the staff who might not have otherwise participated in the Investigation; and
(v) Any unique circumstances in which the individual provided the cooperation.
(b) Importance of the underlying matter. The Commission assesses the importance of the Investigation in which the individual cooperated by considering, among other things:
(1) The character of the Investigation including, but not limited to:
(i) Whether the subject matter of the Investigation is a Commission priority;
(ii) The type of securities violations;
(iii) The age and duration of the misconduct;
(iv) The number of violations; and
(v) The isolated or repetitive nature of the violations.
(2) The dangers to investors or others presented by the underlying violations involved in the Investigation including, but not limited to:
(i) The amount of harm or potential harm caused by the underlying violations;
(ii) The type of harm resulting from or threatened by the underlying violations; and
(iii) The number of individuals or entities harmed. 1
(c) Interest in holding the individual accountable. The Commission assesses the societal interest in holding the cooperating individual fully accountable for his or her misconduct by considering, among other things:
(1) The severity of the individual’s misconduct assessed by the nature of the violations and in the context of the individual’s knowledge, education, training, experience, and position of responsibility at the time the violations occurred;
(2) The culpability of the individual, including, but not limited to, whether the individual acted with scienter, both generally and in relation to others who participated in the misconduct;
(3) The degree to which the individual tolerated illegal activity including, but not limited to, whether he or she took steps to prevent the violations from occurring or continuing, such as notifying the Commission or other appropriate law enforcement agency of the misconduct or, in the case of a violation involving a business organization, by notifying members of management not involved in the misconduct, the board of directors or the equivalent body not involved in the misconduct, or the auditors of such business organization of the misconduct;
(4) The efforts undertaken by the individual to remediate the harm caused by the violations including, but not limited to, whether he or she paid or agreed to pay disgorgement to injured investors and other victims or assisted these victims and the authorities in the recovery of the fruits and instrumentalities of the violations; and
(5) The sanctions imposed on the individual by other federal or state authorities and industry organizations for the violations involved in the Investigation.
(d) Profile of the individual. The Commission assesses whether, how much, and in what manner it is in the public interest to award credit for cooperation, in part, based upon the cooperating individual’s personal and professional profile by considering, among other things:
(1) The individual’s history of lawfulness, including complying with securities laws or regulations;
(2) The degree to which the individual has demonstrated an acceptance of responsibility for his or her past misconduct; and
(3) The degree to which the individual will have an opportunity to commit future violations of the federal securities laws in light of his or her occupation -- including, but not limited to, whether he or she serves as: a licensed individual, such as an attorney or accountant; an associated person of a regulated entity, such as a broker or dealer; a fiduciary for other individuals or entities regarding financial matters; an officer or director of public companies; or a member of senior management -- together with any existing or proposed safeguards based upon the individual’s particular circumstances.
Note to § 202.12. Before the Commission evaluates an individual’s cooperation, it analyzes the unique facts and circumstances of the case. The above principles are not listed in order of importance nor are they intended to be all-inclusive or to require a specific determination in any particular case. Furthermore, depending upon the facts and circumstances of each case, some of the principles may not be applicable or may deserve greater weight than others. Finally, neither this statement, nor the principles set forth herein creates or recognizes any legally enforceable rights for any person.
By the Commission.
Elizabeth M. Murphy
Secretary
Date: January 13, 2010
1 Cooperation in Investigations that involve priority matters or
serious, ongoing, or widespread violations will be viewed most
favorably.
(1) http://sec.gov/news/press/2010/2010-6.htm
(2) http://www.sec.gov/rules/final/2010/34-61339.pdf
(3) http://www.sec.gov/rules/policy/2010/34-61340.pdf
(4) http://www.sec.gov/divisions/enforce/enforcementmanual.pdf
»
- advertisements -
I have to admit that I have never heard about this information I have noticed many new facts for me. Thanks a lot for sharing this useful and attractive information and I will be waiting for other interesting posts from you in the nearest future.keep it up. online car insurance
i wish there was some type of banker cancer that was deadly and incurable like pancreatic cancer
^^ its called a deflationary depression of Grand Supercycle degree .... GREAT news for you, RoastingBankers, cause we're ONLY a decade deep into one now and there is "only" 1 to 4 decades of it left to suffer through.
though as per what you're really interested in, the next 3 years will, imho, uproot the entire fabric of the current system in place and lead to a massive overhaul.
the pendulum of armstrong's public / private cycle is about to swing WAY the F back to the LEFT. big time.
An imposing set of documents, good find tho. I do find it shitty that this is essentially giving a beat cop pardon powers. And all these details about what considerations should be taken when giving someone immunity are nice n all...but even if a deal doesn't adhere to said standards, who is gonna enforce it?
Really the depressing thing to me is that AIG GenRe fracas didn't seem to get a single person in jail or even barred from the securities industry. All parties say in no uncertain terms that senior management engaged in fraud. Surely those asshats have names.
So long as folks aren't being prosecuted on an individual basis, blue plate immunity specials like thisun are just a way for SEC enforcement folks to pad their nest for a wallst job.
Looks like a new dress, but same toothless ho.
Chopshop - Thanks for shining the light on this outrageous miscarriage of justice. Your earlier post of the Jan 20, 2010 DOJ Press Release on the DOJ sellout, er, settlement agreement of massive, multi-year (2000-2004) fraud by Buffett's General Re was eye-opening and mind-boggling. It exposed the DOJ allowing big shots like Buffett to buy their way out of prosecution and jail.
The DOJ fines Buffett's General Re for helping AIG fraud. On Jan 20, 2010 Obama's DOJ delivers a slap on the wrist to Buffett. On May 28, 2008 Buffett endorsed Obama for President, a very important endorsement giving Obama major league support from the business community, even more than that, an endorsement from the most famous, most idolized business tycoon in America.
glad a few folks appreciated it, tom a taxpayer.
you said it: i really can't stand warren.
he is a legendary macro manager and strategic marketer ... who sucks at tactical positioning.
about the only things i like of warren are:
1) 'tide goes out ...' quote
2) his slip in like '99 on CNBC about 17/18 year cycles (oops)
3) his advice to write down 3 things to accomplish each day before getting out of bed
4) the fact that he has no shame whatsoever in hoodwinking either the public or the SEC itself
but who the F am I, Warren is the man ... until the tide goes out again and BRK is shown for the naked, solo-directional "all-in" clown that its tactical portfolio mgmt really is.
gotta give credit where it is due and a things he's done lately are just brilliant ... from massively endorsing Obama (a no-brainer move that has clearly paid off [see r-tickle] above to hooking up GS with public endorsal (in the grand scheme: the warrant deal was meaningless while the endorsement and publicity were anything but).
ugh, the hater in me can hardly wait until we break 5K INDU / DJ-30 and Warren's Disney commercial takes on a whole new light.
as per the MKTs and their date with destiny in the garbage bin ....
the title of America's #1 song (as per Billboard) says it ALL ... (music almost always does) :
are you friggin kidding me with THAT title ???
@tom
Well said. Buffett is like many business types. Truth and honesty are sacrificed at the altar of money. Maybe a depression will cure that systemic problem. Evil will always exist, but it would be nice if it were somewhat less prevalent.
I thought that they would save the berk split for a day that they wanted to pop the markets, but I guess they decided to use it on a day the bottom was dropping out. Did the split keep the market from losing 300 points? I say yes, but long term I see berk b being one of the crappiest buys out there. If it wasn't for the R&R purchase, that stock would be utterly worthless. Also, any bets WB dies this year? I have a feeling....do not know why. He just seems ripe for a heart attack.
Are you tired of banks loading you up with fees while taking taxpayer money and giving executives huge bonuses? Send a final notice -- payment is past due and it's time for the government to rein in the banks.
Wall Street banks threw our economy into crisis. Bailing them out cost taxpayers hundreds of billions of dollars. Now, with unemployment at 10 percent, those same Wall Street banks are planning to give six- and even seven-figure bonuses to the executives who created this mess.
Join our Partners at Working America and send the banks a final notice. Payment is past due on the harm they've done to the economy. Payment is past due on all the ways they've mistreated their customers -- from excessive credit card fees to risky mortgages.
We're letting the bankers know: Since they won't rein themselves in, the government is going to have to do it. And we're letting our Senators know we want the banks to face consequences for their actions.
President Obama's proposed financial crisis responsibility fee on the largest banks will help get back the taxpayer money that bailed out those same banks, without penalizing community banks and small firms.
We need a consumer financial protection agency to provide strong oversight so banks can't play Russian roulette with our economy again, and to protect customers from being bled dry.
Click here to let the bankers know this is their final notice. Your message also will go to your Senators, to urge them to rein in the banks.
http://tinyurl.com/ycuhspd
I know canned Obama-speak when I read it. Try clearing your marketing with management before posting.
And tell Barry to get a job he can handle while you're at it.
Preach!
Unemploment at 25% and they stole tens of trillions. Pay it back or die!