September 10, 2012

Trying My Patience: More on “Study: SEC’s Revolving Door Is No Biggie”

SEC Enforcement Director Rob Khuzami recently penned this blog on the SEC’s ‘revolving door’ myth that I blogged about last month. We both saw things similarly – that the mass media was trying to turn the “revolving door” into something it isn’t, just as the academics found – and I was going to leave this blog at that.

Then I got mad. Last week, Bloomberg came out with this silly article – entitled “Top Bank Lawyer’s E-Mails Show Washington’s Inside Game” – in which I bet the reporters wrote the article’s title before they slugged through a bunch of emails from the SEC that they accessed via a FOIA request. In a way, I felt kind of sorry for them. I’m sure they were hoping for so much more.

I’m not sure why but the reporters decided to focus on former SEC Commissioner/Market Reg Director Annette Nazareth – and her big “abuse” is that she sent friendly emails to Commissioners and Staffers with whom she used to work with. The horror! In one email, she provides her ten cents on certain provisions of Dodd-Frank. What a scandal! And there is much more nonsense in this long and detailed piece. Do you think other emails traded with the Staff by thousands of others have a different tone than the ones singled out in the article? All of the highlighted emails were innocuous – with the crime that they were written by a human and not a machine. These are emails for heaven’s sakes. Not formal memos.

I kept reading, waiting for a smoking gun. But basically it showed that Annette did her job on behalf of her clients – and that the SEC did it’s job of not treating her differently. If anything, the article’s title should have been “We Stuck Our Noses In Other People’s Emails and Proved the Revolving Door Study Was Correct.” It’s really unbelievable that Bloomberg’s editors let this thing see the light of day (as well as the WaPo editors who re-ran the Bloomberg piece yesterday).

Sadly, other publications blindly decided to run with the theme floated in the Bloomberg piece, such as this Advisor One article. This New York Magazine article expounds on the Bloomberg piece and goes as far to liken the responsibilities of lawyers to journalists. Here’s an excerpt: “We don’t like these kinds of cozy relationships between journalists and the sources they cover, and we roundly criticize journalists who step over the line.” It’s news to me that this type of code applies to lawyers. In fact, all government agencies want input from the outside – without it, we would get laws that don’t work. [And I certainly wouldn’t characterize the type of emails in the article as “cozy.” They were normal informal emails. They weren’t talking about going to the ballgame together, etc. – and even that type of email doesn’t show anything sinister.]

The problem with this exaggerated journalism is that it could impact someone’s reputation. And even more importantly – looking at the big picture – it could cause some bright folks from deciding to ever work at the SEC. Why take a huge pay cut to serve your country if you will then be pilloried for continuing relationships with those you worked with when you leave?

So Bloomberg reporters, please step up and be real journalists. There is plenty of real news to cover these days. If you can’t think of anything, give me a half hour to troll through your emails and let’s see what I come up with. I imagine it will be a whole lot juicer than the trivial trove of nothingness that you found here…

NYSE Proposes 4% Average Drop in Proxy Distribution Fees

A few weeks ago, the NYSE filed this proposal with the SEC that follows up on some of the NYSE Proxy Fee Advisory Committee’s recommendations from May to streamline proxy distribution fees and make them more transparent. If approved by the SEC, the net effect of the proposed changes would be a decrease in proxy distribution fees of approximately 4%, with the impact depending on a company’s circumstances.

Dodd-Frank: SEC Sends Credit Rating Standardization Study to Congress

On Friday, the SEC delivered the credit rating standardization study to Congress as mandated by Section 939(h) of Dodd-Frank.

The Second Deal Cube Tourney: Round One; 9th Match

As noted in these rules (and keep sending more pics for the next tourney), please vote for two of the following four cubes below:

“Big One That Got Away” – Blank Cube
E.F. Hutton-Drexel Burnham RIP
Satellite Dish

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– Broc Romanek