October 19, 2009

SEC Hires First COO for Enforcement: Bolsters Goldman Sachs Conspiracy Theory

On Friday, the SEC announced that Adam Storch had been lured out of Goldman Sachs to fill the newly-created position of Managing Executive in the SEC’s Division of Enforcement. As noted in the SEC’s press release:

Mr. Storch will be responsible for project management and workflow for various infrastructure and operational aspects of the Division, including budget, information technology, and administrative services. In addition, he will oversee the workflow and process associated with the collection and distribution of Fair Funds to harmed investors. Along with Lorin Reisner, the Deputy Director of the Division of Enforcement, Mr. Storch will supervise the Office of Market Intelligence, improving the collection, analysis, risk-weighing, triage, referral, and monitoring of the hundreds of thousands of tips, complaints and referrals that the agency receives each year.

Getting beyond Adam’s tender age of 29 – which is easy for me to get beyond, personally I feel I was “smarter” at that age, but not wiser (note Seeking Alpha has trouble with age) – the issue of whether Goldman Sachs secretly rules the world is what the public has focused on so far (here is an example, again and another). This one from the Motley Fool has a funny line:

I pledge allegiance to the Flag of the United States of America, and to the Corporation, which it supports, One Nation under Goldman, indebted forever, with Liberty and Justice unlikely.

I can understand how the fear of a Goldman conspiracy may the focus – and perception indeed does matter – but this clearly is a recruitment coup for the SEC. It’s not easy to lure someone from the Street with a government salary, particularly someone that can help sift technologically through the massive amounts of market data and the numerous leads that the SEC receives daily. But maybe the SEC shouldn’t have started Adam out in such a key role and saved themselves some “face”…

A Comeback for Insider Trading?

It’s one of those crimes that we will never eradicate and periodically rears its ugly head as perhaps being rampant – insider trading. It’s too easy to do and the gains are immediate (and likely feels like no one is being hurt).

On Friday, the SEC announced the latest “giant” in a series of insider trading actions that goes back decades. A billionaire hedge fund manager got charged with being a “master of the rolodex” rather than a genius in trading strategies. Raj Rajaratnam cultivated a network of senior executives at major companies like IBM, Intel and McKinsey.

I normally don’t cover insider trading, but this one is a “biggie” (see this NY Times article and this Reuters article) and may signal a larger trend. For those in companies, make sure your compliance programs are spotless so that you don’t get dragged down by any true fraudsters in your midst when the diligence for litigation commences…

Mailed: September-October Issue of The Corporate Counsel

The September-October issue of The Corporate Counsel includes pieces on:

– More Meltdown Fallout–Going Concern and Other Out-of-the-Ordinary Audit Reports in SEC Filings
– Omitting Schedules from a Filed Merger Agreement–The Merrill Lynch Bonuses
– Filing an Acquired Company’s Post-ยง15(d) Suspension 10-K–EDGAR Technicalities
– Discussion at ABA of Risdall’s Reg D Integration Holding
– A Few Thoughts on FASB’s Recent Codification of Accounting Principles
– FAS 5 Now Subtopic 450-20–Impact on Audit Letters?
– Expert Consent Required For Reference to Consultant, Etc.?–New CDI
– New/Revised CDIs Provide More Flexibility for Selling Security Holder Registration

Act Now: Get this issue on a complimentary basis when you try a “Rest of ’09” for free when you try a 2010 no-risk trial today.

– Broc Romanek