Personally I don’t like the label “Whistle-blowers”, some how it sounds like a disparagement instead of an honor; I like the phrase “The Truth Tellers” much better…it gets right to it with out the bull-sh-t baggage.
Below another fine article by Pam Martens and Russ Martens about this very subject… The Truth Tellers are our modern-day Heroes!
Over the past week Rasmussen polls have captured the epic disgust of voters in the direction America is heading. Only 31 percent of likely voters believe the country is heading in the right direction; 67 percent of voters are angry at the current policies of the federal government; and just 24 percent trust the federal government to do the right thing most or nearly all the time.
The smooth functioning of the U.S. economy is based on citizens having confidence in the country’s leaders. Over two-thirds of the U.S. economy stems from consumer spending. When consumers lack confidence, they scale back spending. When businesses lack confidence, they lay off workers or stop hiring. When new home buyers lack confidence, they postpone signing a contract. Last Friday, Bloomberg News reported that the CEO of Signet Jewelers Ltd., Mark Light, was blaming a slowdown in diamond wedding ring sales on “a presidential campaign season that has scared couples into closing their checkbooks.”
No Federal agency has done more to drain investor and consumer confidence than the crony Securities and Exchange Commission. Public revulsion of the SEC has now reached such epic proportions that a whistleblower, Eric Ben-Artzi, has turned down his half of a $16.5 million whistleblower award from the SEC for alerting the agency that his former employer, Deutsche Bank, had been inflating the value of its credit derivatives to avoid taking losses. The SEC imposed a $55 million fine on the bank but took no further actions against the employees who were responsible for misspricing the derivatives and hiding the losses.
In an OpEd in the Financial Times earlier this month, Ben-Artzi explained his digust with how the SEC went about its enforcement in the case as follows:
“…top executives retired with multimillion-dollar bonuses based on the misrepresentation of the bank’s balance sheet. It is therefore especially disappointing that in 2015, after a lengthy investigation helped by multiple whistleblowers, the SEC imposed a fine on Deutsche’s shareholders instead of the managers responsible.”
Ben-Artzi saw a link to this lapdog enforcement action and the revolving door between the SEC and Deutsche Bank, writing:
“So why did the SEC not go after Deutsche’s executives? The most obvious concern is that Deutsche’s top lawyers ‘revolved’ in and out of the SEC before, during and after the illegal activity at the bank. Robert Rice, the chief lawyer in charge of the internal investigation at Deutsche in 2011, became the SEC’s chief counsel in 2013. Robert Khuzami, Deutsche’s top lawyer in North America, became head of the SEC’s enforcement division after the financial crisis. Their boss, Richard Walker, the bank’s longtime general counsel (he left the bank this year) was once head of enforcement at the SEC…
“This took place on the watch of Mary Jo White, the current chair of the SEC, whose relationship with Mr. Khuzami and Mr. Rice dates back 20 years. She bears ultimate responsibility for the Deutsche fine.”
If Ben-Artzi were the first to charge the SEC with cronyism getting in the way of justice at the SEC, his charges might be taken less seriously. But his assessment comes on the heels of a long line of charges from the quintessential SEC whistleblower – its own inside attorneys.
In 2014, The American Lawyer published excerpts from 2,000 pages of documents it had obtained from the SEC under a Freedom of Information Act (FOIA) request. The documents showed that former SEC attorney, James Kidney, had pressured the SEC to investigate executives at Goldman Sachs for their involvement in the 2007 investment scam known as Abacus 2007-AC1. Goldman Sachs knew that Abacus, a subprime debt deal, was designed to fail and allowed a hedge fund, John Paulson & Co., to bet against it while recommending it as a good investment to its own clients. The SEC only pursued a mid-level employee, Fabrice Tourre, while settling with Goldman Sachs for $550 million. The SEC brought no charges against John Paulson who made a $1 billion profit shorting the deal after assisting in building its portfolio of debt expected to experience negative credit events.
When Kidney retired from the SEC in March of 2014, he delivered a scathing critique of SEC management in his retirement speech. Kidney said that “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’s charges echoed those made by former SEC attorney Gary Aguirre in 2006 when he testified before the U.S. Senate on the Judiciary. During Aguirre’s tenure at the SEC he had pressured his superiors to serve a subpoena on John Mack, a powerful former official at Morgan Stanley. Aguirre wanted to take testimony about Mack’s potential involvement in insider trading. What happened instead was that Mack was protected and Aguirre was fired over the phone while on vacation. The termination looked particularly specious because just three days prior, Aguirre had contacted the Office of Special Counsel to discuss the SEC’s protection of Mack. Aguirre testified to Congress that the SEC had thrown a “roadblock” in his investigation because the suspected insider trader had “powerful political connections.”
Yet another SEC attorney, Darcy Flynn, told Congressional investigators and the SEC Inspector General in 2011 that for at least 18 years, the SEC had been shredding documents and emails related to its investigations — documents that it was required under law to preserve. Flynn told investigators that by purging these files, it had impaired the SEC’s ability to see the connections between related frauds.
Even a nonpartisan Congressional watchdog agency has given a failed grade to the SEC. In 2013, the Government Accountability Office (GAO) issued a report on the declining morale among SEC employees. The report found that the SEC ranked 19 out of 22 similarly sized Federal agencies in overall satisfaction and commitment. The GAO said its findings were consistent with the Partnership for Public Service’s analysis of the Office of Personnel Management’s 2012 Employee Viewpoint Survey. That analysis found that “SEC’s overall index score—which measures staff’s general satisfaction and commitment—declined from 73.1 in 2007 to 56 in 2012.”
Long before monetary awards were available for blowing the whistle on wrongdoing, America’s whistleblowers have demonstrated the kind of courage, personal sacrifice and moral compass that is so often missing in those found in political high places.
In a 2012 court decision involving the arrest of peaceful protesters in the Occupy Wall Street movement in Manhattan – another dedicated group of citizens attempting to get their country moving in a positive direction – Federal Judge Jed Rakoff wrote:
“What a huge debt this nation owes to its ‘troublemakers.’ From Thomas Paine to Martin Luther King, Jr., they have forced us to focus on problems we would prefer to downplay or ignore. Yet it is often only with hindsight that we can distinguish those troublemakers who brought us to our senses from those who were simply…troublemakers.”
Is there any doubt left that the real troublemakers that are holding America back and sabotaging the future of the next generation are those still supporting the thoroughly discredited status quo in America?