Retiring SEC Lawyer Crucifies His Employer: "It's A Cancer" Working On Behalf Of The "Bankster Turnpike"

Tyler Durden's picture


We wonder: why does the truth about the broken system, as witnessed and experienced by individual employees, always wait until said employee is about to depart their employer or just after? Obviously that is rhetorical. However, it is worth mentioning, because in the latest such revelation, a retiring SEC trail attorney veteran, James Kidney, who had been with the agency since 1986 and retired this month, just crucified his now former employer for doing precisely all those thing that outside critics - notably Zero Hedge - have accused the most co-opted, clueless, corrupt and criminal regulators of doing. Only he said it in a way that not even we could have phrased.

From Bloomberg:

The SEC has become “an agency that polices the broken windows on the street level and rarely goes to the penthouse floors,” Kidney said, according to a copy of his remarks obtained by Bloomberg News. “On the rare occasions when enforcement does go to the penthouse, good manners are paramount. Tough enforcement, risky enforcement, is subject to extensive negotiation and weakening.”


Kidney said his superiors were more focused on getting high-paying jobs after their government service than on bringing difficult cases. The agency’s penalties, Kidney said, have become “at most a tollbooth on the bankster turnpike.

Wow: another "erudite" former cog in the systemic wheel goes off the reservation and gets all tinfoil bloggy on us. He goes on:

In his speech, Kidney also hit the agency for using misleading statistics to showcase its enforcement efforts. The SEC should focus on the quality of its actions, rather than try to file as many as possible just to tout its record to lawmakers and the media, he said.


“It is a cancer,” Kidney said of the agency’s use of numbers. “It should be changed.”

His name was James Kidney.

Kidney said in the interview that he will always be an SEC loyalist and was trying to offer constructive criticism that could help the agency. He said he wasn’t singling out any specific cases or officials in his comments.


“I don’t think we did a very aggressive job with all the major players in the crash of ’08,” he said, noting that as a civil enforcement agency, the commission does not need to prove its cases beyond a reasonable doubt like the Justice Department does. “The SEC has a lower burden of proof and we should be pushing the envelope a bit.”

You mean, pretending to regulate the same people where SEC staffers wish to work will no longer fool most of the people all of the time? The horror... The horror.

A quick reminder on the Goldman wrist slap deal with the SEC, where Kidney was part of the initial, if not final team.

Kidney, who was part of the initial team that was building the Goldman Sachs case, pressed his bosses in the enforcement division to go higher up the chain. He later took himself off the team after being given a lesser role, according to people familiar with the matter.


In particular, the people said, Kidney argued that the commission should sue Tourre’s boss, Jonathan Egol. Kidney also wanted to bring a case against Paulson & Co. or some executives at the hedge fund, which helped pick the portfolio of securities that were underlying the Abacus vehicle and then bet against it.


The SEC ultimately decided not to sue Egol, the Paulson firm or any individuals from the hedge fund.

Yes, it was all the not even 30 year old Tourre's fault. All of it. And the person who dared to point out this criminal disdain for justice by the SEC? He was demoted by the most corrupt of all: Mary Schapiro.

The punchline - the SEC is a regulator only for optical purposes. It's true role is not to shake up the status quo.

In his retirement speech, Kidney noted that he had been “involved in a high-profile case or two” and said he had gotten a message from above not to take too many risks.


“I have had bosses, and bosses of my bosses, whose names we all know, who made little secret that they were here to punch their ticket,” Kidney said. “They mouthed serious regard for the mission of the commission, but their actions were tentative and fearful in many instances.”

Simply said: disgusting and pathetic - both the sad truth about the US market "regulator", which most were already aware of, and that an SEC employee has to wait until the day he quits to express it.

Oh, and if anyone still wants to know why the perfectly legal parasitism of HFT has turned off the retail investors for the last time, and why everyone knows the market is rigged - it is not the vacuum tubes. Nope. It is the criminals at the SEC who made it legal for 25 year old math PhDs to rig stocks in the first place, and who allowed the TBTF banks to make the marketplace into their own personal no risk, all return piggy bank. Them, and of course Congress - because when the day comes that all those idiotic trades blow up and the banks have to pay the penalty, why - they just get another taxpayer bailout, courtesy of America's democratically elected "representatives."

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Tue, 04/08/2014 - 10:43 | 4635515 Cornholiovanderbilt
Cornholiovanderbilt's picture

"Retiring"  So the pos put up with it long enough to get a check forever.  What a putz!

Tue, 04/08/2014 - 10:48 | 4635531 whisperin
whisperin's picture

Maybe, but I wonder how many cases and against who he referred upstairs only to see them essentially disappear?

Tue, 04/08/2014 - 10:50 | 4635543 Pladizow
Pladizow's picture

“It is difficult to get a man to understand something, when his salary depends on him not understanding it.” - Upton Sinclair

Tue, 04/08/2014 - 10:53 | 4635554 SilverIsKing
SilverIsKing's picture

Kidney Failure

Tue, 04/08/2014 - 11:02 | 4635579 Gaius Frakkin' ...
Gaius Frakkin' Baltar's picture

Lawyers have such a heightened sense of self-worth. A lawyer tells us something everyone with a brain already knows on his retirement day and we're all suppose to think he's some kind of hero? Enjoy your fun in the sun asshole.

Tue, 04/08/2014 - 11:09 | 4635612 Buckaroo Banzai
Buckaroo Banzai's picture

The SEC was put in place to create the illusion of fair markets. To expect them to do anything real is silly. For that would shatter the illusion, you see.

Tue, 04/08/2014 - 11:13 | 4635619 NotApplicable
NotApplicable's picture

Wait... the SEC is an extortion racket??

<= This is my shocked face.

Tue, 04/08/2014 - 11:13 | 4635635 Four chan
Four chan's picture

every time i think of the sec "regulater", i picture that schlub in "boilerroom" eating a banana like a misanthropic chimp.

Tue, 04/08/2014 - 11:31 | 4635713 outamyeffinway
outamyeffinway's picture

And this changes......what?

Tue, 04/08/2014 - 11:42 | 4635756 Thought Processor
Thought Processor's picture




The sad part is that this is actually news to some people.

Tue, 04/08/2014 - 11:49 | 4635776 maskone909
maskone909's picture

this is why i ZeroHedge

excellent job Tyler! excellent!

Tue, 04/08/2014 - 17:01 | 4636903 Anusocracy
Anusocracy's picture

The sad part is that after all the information and evidence available, people still fall prey to the siren song of government.

Tue, 04/08/2014 - 12:00 | 4635813 drendebe10
drendebe10's picture

Wow!  What a shocking revelation.  And no less under the watch of the disrespectful, arrogant, narcissistic, pathological lying, illegal alien kenyan muislim sociopathic ignoramus fudge packer in chief.  Who woulda thunk it... absolutely flabergasting.... 

Tue, 04/08/2014 - 12:03 | 4635833 Itchy and Scratchy
Itchy and Scratchy's picture

'Change You Can Believe In' baby!

Tue, 04/08/2014 - 12:20 | 4635924 Dollarmedes
Dollarmedes's picture

Don't worry, Senator Elizabeth Warren is on the case. She'll fix it...just like Senator Chris Dodd and Representative Barney Frank "fixed" it. Yeah...the market is certainly "fixed."

Tue, 04/08/2014 - 13:15 | 4636128 Buckaroo Banzai
Buckaroo Banzai's picture

You mean Senator Lie-awatha? Senator Faux-cahantas? Senator Sack-a-sewage-ia?

Tue, 04/08/2014 - 16:00 | 4636730 Offthebeach
Offthebeach's picture

How much porn can a man watch? Day after day, year after year. You remember when the before you  fat, snagle toothed beastealtrix was  a possible cp illegal. Heck, you remember when the stallion was a colt. Your member lays limp dead and cold, your pants lumped at you cankles. The emals pile up, unanswered.


 A life wasted as a gov boy with a hump job. Your retirement to a new, forth rate South Carolina "estate", fishing for crappie looms before you. Pre death. Kafkaesque, American doublewide. You mind drifts. You think about the South Carolina waiting period for a Italian shitgum.......

Tue, 04/08/2014 - 12:51 | 4636039 kchrisc
kchrisc's picture

The presence of a lawyer is the indication that something is dead or dying. The more lawyers...

Tue, 04/08/2014 - 12:24 | 4635941 Boxed Merlot
Boxed Merlot's picture

Kidney Failure...


Amen.  This guy was around during the original William Black era of S&L prosecutions and maybe had a bit of a conscience back then.  He should have learned Control Fraud can take on many forms including stock options, ( ), conflicts of interest and co-opted corporate governance personnel.  He's had a front row seat to see to it these self same failures became features in this state run institution he spent his career at as well. 

I suppose one can only hope his own nest is feathered with nothing more than the same vaporous frns being used to scourge those he was sworn to protect.


By the way, stock options will probably go down as the last bastion of buying stocks at market rates when the post mortem is performed on this latest chapter of the US experiment in "self governance".



Tue, 04/08/2014 - 15:04 | 4636600 Son of Loki
Son of Loki's picture

Yes. I recently watched a lecture/interview with some high level econ professor from Princeton. He said back in the 1980s over 700 bankers were indicted...this time....Zero.

He said the present situation is seriously screwed up.

Tue, 04/08/2014 - 10:55 | 4635564 Oh regional Indian
Oh regional Indian's picture

Wonders will never cease. A Kidney  grew a pair of ballz.

jurassic dystopia...the end of bitterness...


Tue, 04/08/2014 - 10:56 | 4635568 LawsofPhysics
LawsofPhysics's picture

Indeed, certainly are a lot of useless paper-pushing fucks "finding God" lately...

Meh, that which cannot be sustained, wont be.

Hedge accordingly.

Tue, 04/08/2014 - 19:44 | 4637464 Greenskeeper_Carl
Greenskeeper_Carl's picture

at least he did come out and speak about how wrong all this is, perhaps a little late. Playing devils advocate here, but he could have stuck around in the niave belief that he could actually bring about change while he was there. he may well have stuck around just long enough to collect a pension, but he also could have spent his time actually trying to do what he was supposed to do. Either way, we should be appreciative that he is speaking out now. Better late than never. talking people down because they should have spoken up sooner isnt going to make much progress

Tue, 04/08/2014 - 10:57 | 4635573 philipat
philipat's picture

I truly wish that ONE of the bastards involved in manipulating Gold, from either JPM or BIS, would come forward. Although, of course, the risk of being "Suicided" must be kept in mind........

Tue, 04/08/2014 - 17:36 | 4637013 Wahooo
Wahooo's picture

Nothing more than a towel boy.

Tue, 04/08/2014 - 11:53 | 4635787 fleur de lis
fleur de lis's picture

They would shoot the messenger. They want "team players" -- isn't that the most annoying term in corporate life? Reporting problems would only alert the head honchos about a "problem" employee who follows the rules. Can't have that! Round and round it goes, where it stops nobody knows.

Tue, 04/08/2014 - 10:49 | 4635534 Two-bits
Two-bits's picture

Yes, but now I hear that through a new government contract with Dewalt, each retiring US government shill receives a safety-less nail gun with earned outgoing compensation packages.

Tue, 04/08/2014 - 17:11 | 4636941 PT
PT's picture

The alternative is to be a whistle-blower and we know what happens to them.  But who remembers the whistle-blowers or even the whistles they blew?


Not justifying anything, just saying.

Tue, 04/08/2014 - 10:45 | 4635518 Skin666
Skin666's picture

Free John Corzine damnit!

Tue, 04/08/2014 - 11:55 | 4635795 fleur de lis
fleur de lis's picture

Since when was Corzine not free? He's running wild and free like every other SEC street rat.

Tue, 04/08/2014 - 13:16 | 4636134 Buckaroo Banzai
Buckaroo Banzai's picture

You missed the delicious sarcasm, I guess.

Tue, 04/08/2014 - 14:00 | 4636321 fleur de lis
fleur de lis's picture

You're right, I thought he was serious.

Tue, 04/08/2014 - 17:13 | 4636950 PT
PT's picture

It's definitely not one of my favourite sayings they have around here.  I'm always worried about how many people won't get it.



Tue, 04/08/2014 - 10:48 | 4635521 Ignatius
Ignatius's picture

I don't understand his complaint at all.

What's the point of owning regulators if they're not going to look the other way?

It's just simple logic.

Tue, 04/08/2014 - 10:55 | 4635565 NoDebt
NoDebt's picture

I don't get it either.  Does this guy not understand the concept of "investment"?  When you "invest" in your regulator, you expect a healthy return.  Seems like it's working just fine to me.

In other news.... Sam Zell was on CNBC defending the 'carried interest' tax loophole (where a manager of an investment group gets to declare his management income as capital gains, even though he didn't have any of his own money in the fund).  Short version:  you have to keep offering this lower rate to these managers or all of capitalism will collapse.

Tue, 04/08/2014 - 10:47 | 4635524 kk1532003
kk1532003's picture

fuck this asshole.  He's part of the problem for 30 years and now he grows a conscience? You're on the list shitbag.  I just hope those that you fucked for 30 years live long enough to pay it back to you in spades...

Tue, 04/08/2014 - 10:53 | 4635553 HamRove
HamRove's picture

At this point, I think he'd rather be on your list than the bankers list...they're dropping bodies all over the place.

Tue, 04/08/2014 - 10:55 | 4635563 Keyser
Keyser's picture

Lt's put the shoe on the other foot... Would you destroy your career to "do the right thing"? 


Tue, 04/08/2014 - 11:11 | 4635625 Buckaroo Banzai
Buckaroo Banzai's picture

Sure. Lots of people have. It's called "going Galt."

Tue, 04/08/2014 - 11:13 | 4635636 TheMeatTrapper
TheMeatTrapper's picture

Yes. I have. Funny thing, my career is turning out just fine. I make more money, have a clear concious and everybody knows exactly where I stand. You can do the right thing and prosper. It just takes a little bit of balls and self respect to do it. 

Unfortunately, most people are pitiful cowards who have neither. 

Tue, 04/08/2014 - 11:37 | 4635739 Keyser
Keyser's picture

Alas, I regret that folks of your ilk are a dying breed... Good on you for standing by your beliefs... 


Tue, 04/08/2014 - 11:38 | 4635746 HardAssets
HardAssets's picture

Lets put the shoe on your other foot . . . . .

Would you destroy the futures & freedom of your children and grandchildren for your 'career' of lies and theft  ?

Tue, 04/08/2014 - 12:15 | 4635898 Pee Wee
Pee Wee's picture

Did you say other foot?

Your children are already in the meat grinder - no future, no freedom, all debt, all war, all the time.

Tue, 04/08/2014 - 11:53 | 4635777 4 wheel drift
4 wheel drift's picture

Would you destroy your career to "do the right thing"? 


the better question is.....  if you are a carreer criminal, why would you do anything to ruin your carreer...?




apparently his sudden found "integrity" allows him to sing like a bird ?  i would like to ask the guys in prison who were sent there as a token proof of the SEC "good work" their opinon of the man and the institution


a thief who steals from other thieves........


Tue, 04/08/2014 - 17:21 | 4636979 PT
PT's picture

I must say, it is a bloody scary thing to quit your job on the spot when you have no other job to go to and no idea.  But I've done it and had no regrets.  (Okay, actually, I didn't quit on the spot.  It took me all weekend to think about it.)  I recommend it to anyone.

Tue, 04/08/2014 - 11:13 | 4635637 dontgoforit
dontgoforit's picture

If he had tried to whistleblow anywhere along the line, they would have blown him out of the way; figuratively or literally, you pick.

Tue, 04/08/2014 - 11:19 | 4635657 NotApplicable
NotApplicable's picture

If he had only been there for 10 years, I'd cut him some slack.

But 30???? He is just as much a part of the problem as the assholes he's been carrying water for all of these years.

He could've at least leaked out some supporting documentation.

Tue, 04/08/2014 - 17:23 | 4636985 PT
PT's picture

You beat me to it:  He could at least have documented the problems and sent multiple copies to friends, strangers, the press and the interwebs.

Tue, 04/08/2014 - 11:17 | 4635647 NotApplicable
NotApplicable's picture

Thirty years as a Useful Idiot.

Did he really not understand how all of his efforts only provided cover for the criminals in higher paygrades?

Fuck him, indeed!

Tue, 04/08/2014 - 12:10 | 4635873 Bangin7GramRocks
Bangin7GramRocks's picture

It may have been better 20 years ago. They used to put those fuckers in jail. Something changed and now they are all immune to justice. The Enron crew did some real time for the shit that JP Morgan practically brags about in analyst calls.

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