Bloomberg FOIA Documents How Wall Street Made A Muppet Of The SEC, Mary Schapiro And Dodd Frank

Tyler Durden's picture

That the SEC is the most incompetent, corrupt, irrelevant and captured organization "serving" the US public is known by everyone. And while the details of the SEC's glaring lack of capacity to do anything to restore investor confidence in the capital markets, which has become a casino used exclusively by Wall Street to defraud any retail investor still stupid enough to play (which lately a moot point as there have been no material retail inflows into mutual funds in over three years), are scattered, courtesy of Bloomberg we now have the best summary of just how the utterly clueless SEC is a muppet plaything of Wall Street, and together with it, the "grand regulation" that was supposed to keep Wall Street in check, is nothing but what Wall Street demand it to be, and forced the SEC, way over its head on regulation, to accept every change, that the very banks that are supposed to be regulated, demands as part of Dodd-Frank reforms. In short: everything we know about Wall Street 'regulation' has been a farce, and a lie, exclusively thanks to corruption rampant at the now documentedly incompetent Securities And Exchange Commission.

Bloomberg has the smoking gun.

It had been two days since U.S. lawmakers negotiated all night to finish rules that would reshape the business of Wall Street. The 20-hour session left legislators, aides, lobbyists and regulators exhausted. Almost no one had a grip on all the details.


Then Annette Nazareth stepped in. That Sunday morning, she e-mailed a dozen Securities and Exchange Commission officials about the bill that would become the 2,300-page Dodd-Frank Act.

Who is Annette Nazareth?

Nazareth, herself a former SEC commissioner, represents the biggest banks and securities firms as a partner in the Washington office of Davis Polk & Wardwell LLP. She attached an annotated copy of the measure to her June 27, 2010, e-mail, marking changes made during the wee hours. It could be an invaluable tool for an agency hard-pressed to analyze the bill on a tight deadline.

Nazareth was the good Wall Street funded Samaritan that stepped into bail out the SEC in its moment of need.

In case you would find it helpful,” Nazareth wrote to the group, many of them ex-colleagues.


Two hours later, SEC Chairman Mary Schapiro responded: “Thanks. We have our work cut out for us.”

And who is Davis Polk:

With Nazareth on board, Davis Polk was hired as outside counsel on Dodd-Frank by the six largest U.S. banks and the Securities Industry and Financial Markets Association, the Wall Street trade group, according to the law firm’s website. The firm also performed work for foreign lenders including Credit Suisse Group AG (CS) and Deutsche Bank AG.

As for Dodd Frank it needs no introduction: it is the Wall Street sponsored abortion that assures nothing has changed on the TBTF front, that banks can do whatever they wish, and that the SEC is powerless to intervene even when necessary. As Elliott management said, Dodd Frank is the one piece of legislation that has assured the Lehman failure was merely an appetizer to the main course when massively undercatpitalized banks will be tumbling like dominoes in a centrally-planned world.

How did Bloomberg get its information:

Nazareth’s e-mails to Schapiro and then-SEC General Counsel and Senior Policy Director David Becker, obtained through a Freedom of Information Act request filed by Bloomberg News, demonstrate how lobbyists and lawyers draw on bonds they formed in government service to gain access for clients, and how they work to maintain those ties.

Everyone knows about the SEC's revolving door policy where former SEC workers go to Wall Street to aid and abet their clients to skirt the law, and avoid SEC entangements. It is rare however to see a double revolving door participant such as Nazareth:

Officials routinely leave federal agencies, Congress and the White House to work for the industries they once supervised. While that path is well-trod and legal -- with some time restrictions -- it still provokes handwringing in Washington. Nazareth’s communications provide an inside look at what happens when the revolving door spins.


Nazareth, 56, declined to discuss specific e-mails. She said that people like herself who have worked for both sides are valuable because they can “better translate to their clients” what the SEC is trying to achieve.


“It’s unfortunate where we are in an environment now where everybody thinks that is nefarious,” Nazareth said.


Nazareth added that she “absolutely” doesn’t get favorable treatment.


“I am not batting a thousand, let’s put it that way,” she said. “And I respect that.”

And here we get to the meat of things: Wall Street, via Davis Polk, and its "liason" lawyer, manipulated everyone like docile little muppets.

Nazareth and her colleagues at Davis Polk played a central role as the financial industry shaped its Dodd-Frank priorities, helping write more than 80 comment letters to regulators. The firm’s clients, including Sifma, JPMorgan Chase & Co. (JPM) and Bank of America Corp., targeted rules such as the so-called Volcker ban on proprietary trading, arguing it could create excessive burdens on banks, choke off business and hurt the economy.


The Volcker rule has yet to be completed, along with other key Dodd-Frank components such as swap-trading and mortgage regulations, meaning the success of the banking pushback won’t be fully measured until next year at the earliest.


In May, Nazareth was named as the top woman lawyer in financial regulation at the Americas Women in Business Law awards in New York. Public disclosures from the SEC also underline her clout. In 2009 and 2010, she attended 11 meetings with Schapiro -- twice as many as any single competitor in the law and lobbying business -- according to the chairman’s appointment calendar. Since Dodd-Frank was enacted, Nazareth has taken executives from firms including Goldman Sachs Group Inc. (GS) and Credit Suisse to the SEC, agency memos show.

Manipulating the SEC was not enough, Wall Street also had its tentacles at the CFTC, best known for such humiliations as MF Global and Peregrine Financial:

Nazareth has also attended meetings at the Federal Reserve and represents clients at the Commodity Futures Trading Commission, where she has met with Chairman Gary Gensler among other officials, according to public disclosures.


Lynn Turner, a former SEC chief accountant who is critical of the banks’ agenda, said that Nazareth is “at the top of that list of influential attorneys” who have access to regulators as former SEC officials.


John Nester, an SEC spokesman, said those who used to work at the commission don’t get special access to the chairman. Schapiro “knows a lot of people in government, law, academia and consumer advocacy” and it’s not surprising that she e-mails and meets with some of them, he said.


“In the end, whether she or anyone in the agency agrees with a particular viewpoint or a specific request depends on whether it furthers the mission of the agency,” Nester said.

Nazareth's M.O. is well known to those who have worked on Wall Street - hollow empathy and pandering, just to gain the trust, allowing full out manipulation to ensue:

In her e-mails, Nazareth blended the personal and professional. For instance, she sympathized with Schapiro over a “frustrating” New York Times article in one message, and in another offered to sell the SEC a Davis Polk Web product “at an appropriate government rate.”


The overlap was sometimes evident in Nazareth’s salutations, which varied from “Dear SEC friends” and “Dear Mary and David” to “Hello All.” On March 10, 2010, for example, she wrote to “Chairman Schapiro” asking if she’d take a meeting with Credit Suisse “to discuss the SEC’s concept release on equity market structure.” After Schapiro agreed, Nazareth wrote back: “Fantastic, Mary!”


Schapiro answered the e-mails in a business-like way. The more numerous exchanges between Nazareth and Becker, who are friends, display an easy banter and a familiarity developed over the years.


Becker, now a partner at the Cleary Gottlieb Steen & Hamilton LLP law firm in Washington, declined to comment for this story. His biography on the firm’s website says he was “intimately involved” in financial regulatory reform at the SEC and “served a central role in the commission’s efforts to implement the Dodd-Frank Act.”


Early in the Dodd-Frank debate, in November 2009, Nazareth forwarded a summary of a Senate proposal to Becker, who noted that the actual text ran to 1,100 pages. “More nap time for me,” he wrote.


That prompted Nazareth to ask, “Yea, but what about me? No rest for the outside counsel.”

There is much more in the full Bloomberg expose which is merely the latest nail in the coffin of the manipulated, coopted farce known as the SEC, which probably more than anything, is the reason why investors have now shunned the centrally planned capital marekts entirely. That Mary Schapiro is still employed as the SEC's head after years and years of abysmal decisions, of policy failures, of having done nothing to restore confidence in the market is, quite simply, a joke. This latest narrative will merely confirm it.

Sadly, in this banana republic which employs such banana agencies as the SEC to do the bidding of the banana elite that matters: not democrats, not republicans, but Wall Street's banks full of money (most of it from the trillions in 2008/9 taxpayer funded bailouts), nothing will ever change, until the next and final crash wipes out everything with it and forces the system to start afresh. Only by eliminating the status quo, its insidious tentacles, and the enture existing generation of corrupt, criminal, co-opted regulators, can there be a chance to restore some semblance of fair and efficient markets.

Until then, enjoy the farce of the broken Wall Street casino until trading volumes finally hit zero. It won't be long. At that point it will be too late.

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GetZeeGold's picture



Don't take the shine off our Dodd Muppet....or you're have to keep him!

BaBaBouy's picture

Chalk Up One More  Reason For GOLD $50K... Coming...

BaBaBouy's picture

MoneyChanger Utopia ???

johnQpublic's picture

you'd tend to think it was almost some sort of conspiracy

but you'd be wrong, cause all that kinda talk is just 'theory'

rayduh4life's picture

It's never a conspiracy to the ones involved.

BaBaBouy's picture

Just remember The USA General Rules(i.e. Dumb The Sheeple Down): Black Is White, Up Is Down, And 1 is always 2 ...

Now carry on and keep voting...

Precious's picture

Now you know who writes all this federal legislative shit, and gets paid for decoding it after the legislation is signed.   Lehman Brothers on her CV.  What a fucking winner.

Same thing for Obamacare, which nobody read or understood except for the legal shills who wrote it under the dark cover of night so they can jam it up our asses like a colonoscopy probe we don't need either.

Michael's picture

I think I'm going to need more popcorn.

nope-1004's picture

ALL gov't employees are idiots, not just Shapiro.  They work for the gov't because that's the only institution that doesn't hold anyone accountable.  In a private setting, they can't handle the 'pressure' of having to actually produce something.  Union benefits and surfing the net all day - who wouldn't want to do it?  Nazareth knows that too, and she is simply manipulating for her own benefit - a real slimeball.

And that is why the structure is unsustainable.  Yes, Shapiro and the SEC are idiots, but so are all the other government agencies that produce nothing of value except feed for lobby leeches.


rayduh4life's picture

So if that Government job is soooo good, how come you're on here bitching about it and not out getting one????  Oh, maybe the competition for those is so tough, you couldn't measure up????

Chris88's picture

He's probably bitching because he gets his money stolen from him to pay for these useless idiots that work for the government.  Personally I don't think I'd be able to live with myself if I was a parasite, I mean, government employee.

nope-1004's picture


You hit the nail on the head and are 100% correct.  I don't measure up, because requests for those jobs are overflowing.  With unemployment high, people need to eat, so are looking for the most reliable host to suck off of.  A fat, lazy, lethargic and grossly overweight nation that sits in front of the TV all day, shooting each other at night, is prime gov't material.  If you feel you fit in, then keep sucking off the system.  I don't.


larz's picture

sorry rayduh but you stink like an obama supporter - facts dont matter do they

NotApplicable's picture

I'll just point out another measure, then tell me who the idiots are.

Are they, the tax consumers employed by the government, or the tax payers paying for their deadweight?

As always, it's good work, if ya can get it.

q99x2's picture

Ever go to the  DMV? How about the IRS? Or, the Unemployment, SSA, SNAP, or see the TSA in action? They are all staffed by mutants. The DOT: 11 of them out on the street holding brooms and shovels watching another one of them doing the work. Someone calls the police. They come by and shoot 11 bystanders. The next president gotta put the lunies that Reagan let out back into the asylums and get them out of government jobs.

q99x2's picture

Ever go to the  DMV? How about the IRS? Or, the Unemployment, SSA, SNAP, or see the TSA in action? They are all staffed by mutants. The DOT: 11 of them out on the street holding brooms and shovels watching another one of them doing the work. Someone calls the police. They come by and shoot 11 bystanders. The next president gotta put the lunies back into the asylums and get them out of government jobs.

larz's picture

There is no private setting to work for or in - none of us built this or that or anything else, Ayn Rand was not writing fiction unfortunately. The private sector has been taxed, regulated, goldman sachs-ed and central planned into oblivion - then there is robotics and technology ...a pimply faced antisocial IT jackass is not accountble hiding behind a screen. At least I have memories of what its like to live in a free America alas I dont think my kids will. Shame on our sociopathic institutions and us for accepting a roll as impotent sheeple

brokenclock's picture

I'm going to post it agian for those who missed it.



Why is this so easy to trace and see the fraud? Why doesn't the SEC use this same information to stop this nonsense?Why doesn't someone raise money and advertise this on a major network during a Sunday golf event? (right before every investment commericial, use a cheap local cable buy and hit 50 major markets) This is all the proof anyone needs and if the general public saw this, they would pull all 401K accounts and close them. Also show how bought and paid for our watchdogs are.


Stop crying on this site and do something about it.  There are so many peole on here with real  money to bring this out. Play there game better then them. If you can't then your the sheep. You know therfore: educate, inform, and make a difference.

SHOW EVERYONE HOW CAPTURED OUR REGLATORS ARE AND CUT OFF THE MONEY SUPPLY IN ONE SWOOP.  They dont care about you complaining on this site. Raise the dam money and do something about it. Smack them right across the face with it. Go after the money the same way they did to you.

I will donate 10K umbrellas and give them out at the next big golf event That read's SEC is Captured.  I would prefer to do the Masters on Sunday for maximum impact.


With that said. I read zero hedge every day. On here several times a day and see such great factual posts. Zero Hedge has nailed the HFT manipulation with pinpoint accuracy from day one.  Stop waisting your time calling people trolls and bitchen about the biatchez.  There are a ton of powerful, creative, writers and marketing people in here. Organize now.........

NotApplicable's picture

Nazareth, you say?

Now you're messin' with a ...

Now you're messin' with a sonofabitch.

slaughterer's picture

Shapiro: would you hit it?  Fu kkk NO. 

MsCreant's picture

Not even with a 9 iron?

I wouldn't ask you to use your wood...

orangedrinkandchips's picture

not worth my way....i got a cast iron pipe though

AGuy's picture

Muppets? Hardly. I am sure Mary and Dodd have been well paid [off] by wall street. Its the Retail investors that are the muppets.

You really believe Mary is that stupid? A better term would be "Bought off".

MillionDollarBoner_'s picture

How do these people rationalise their behaviour?

"Weeeelll, if I didn't rape my own daughter, some other punk would and at least I care for her"


"If I didn't steal it, someone else would and I'm spending it on ethical things"


Meesohaawnee's picture

and this is "news"? when i saw SEC  i thought we would get whats on the docket today.. Horny Asian Nurses 3 or Naughty Schoolgirls do Texas 2?

GetZeeGold's picture



Our records show the CFTC has checked out Naughty Schoolgirls.


MsCreant's picture

Screwing schoolgirls and grandmas and...

Cognitive Dissonance's picture

"Everyone knows about the SEC's revolving door policy where former SEC workers go to Wall Street to aid and abet their clients to skirt the law, and avoid SEC entangements."

Don't let that revolving door hit you in the ass on the way out.

"It is rare however to see a double revolving door participant such as Nazareth:"

"Rare"? As in a black swan rare?

I am SOOOOOO weary watching the denial play out. Those who awaken early often feel cursed. Timeout for a refreshed perspective.

illyia's picture

Yes. A timeout.

The only way to win is not to play.

MsCreant's picture

Not a bank run, but a mass exodus from all the markets. 

"Auntie Schapiro, who run Barter town?!?"

Meesohaawnee's picture

trading volumes hit zero.. well with the algo ramp today we get one day closer. ..after all Fex Ex warning is just oh so bullish.

muppet_master's picture

the sec = obummer's muppet just like all the other gov agencies

the DICTATOR tells them how high to jump...the QEorganizer doesn't want to disrupt the corzine-madoff ponzi scheme...he doesn't want the fat cats to "suffer".

rape u can believe in...he doesn't give a rat's ass about the middle class...the HYPCRITE in thief.

Clashfan's picture

The idea that I'llbombya is in charge is pretty short-sighted.

rayduh4life's picture

Exactly Clashfan.  Sheeple need to turn those binoculars around  they're looking through the wrong lense.



Meesohaawnee's picture

dead on. cause after all. Being the crude trades lock step with equity markets if he were interested in giving the middle class a defacto tax break hed get on the bat phone and tell ben "enough is enough " but no. Its all about Obamma. Me me me.

kridkrid's picture

As you watch your down votes accumulate, you should understand that most of them don't come fom "fans" of the president, rather people who are annoyed by the red herring that party politics creates to distract so many, and in this case, you.

DaveyJones's picture

"demonstrate how lobbyists and lawyers draw on bonds they formed in government service to gain access for clients, and how they work to maintain those ties."

Monsanto/FDA  - some folks have gone back and forth 5 times.

but don't worry, it's only what you eat.

GMD - genetically modified democracy


I Am Not a Copper Top's picture

Who gives a shit?  Really.

GetZeeGold's picture



Just people in flyover country.


Confused's picture

Interesting. And now we know how/why things have gotten this far. Apathy.

Poetic injustice's picture

As long as your EBT is refilled, no shit for anything, right?

illyia's picture

Again, this is f^cking terrifying. What can possibly put a stop to it?

Years ago a smooth Dodd walked into a place and did not tip the waitress. He had a sour face, soon on his way to Nantucket to bow before his leaders. His Italian leather shoes shone and his shark-skin suit glimmered. I nearly laid hands on him to demand he account for the trillions that had vanished under his watch. I held back as my friends had no knowledge of his duplicity and would have been horrified.

I have regretted that error ever since.

kridkrid's picture

It would not have had an impact on him. He's a sociopath. I don't know if political office is self-selecting for sociopaths (likely) or if politicians are vetted for this trait before being elevated to important roles (also likely)... It's most likely both. The finance oligarchs (sociopaths) vet the pool of possible leaders from a pool of people primarily comprised of sociopaths (congress) and select the most evil of the bunch for important roles atop committees that are created to oversee the "regulators". Of course the regulators are all working towards their big payday when the can cash in their experience and go to work for the sociopaths on top of the sociopath pecking order. That's our system.

Oh regional Indian's picture

All governments suffer a recurring problem: Power attracts pathological personalities. It is not that power corrupts but that it is magnetic to the corruptible. Such people have a tendency to become drunk on violence, a condition to which they are quickly addicted.

  • Missionaria Protectiva, Text QIV (decto)

kridkrid's picture

I would say that this is true of more than just government, but for many/most large institutions. Universities, corporations, religious institutions, etc. but yes... The notion of power corrupting, while true, pales in comparison to what power attracts.

tbone654's picture

markets are fine... they make perfect sense...  There are times when my paper boy can be in the markets and make money...  that time is not now, and so what?  Those are the bad markets anyway, where anyone can buy and hold and make money...  Livermore called long term investors the higher risk group, more than traders anyway, and I think he's right...  

The paper boy will be in and out of the market at various times in his life...  I'm in it every day...  Just tell me the rules...

kridkrid's picture

It's already "too late" - referencing the last sentence of the article. What we see is the natural conclusion of a system that has behaved exactly as it was designed to behave. Most didn't recognize this as the system paid people along the way, like any Ponzi scheme does. We have reached the tipping point now, but there was no way to walk this down at any point along the way. It was always "too late".