If I ran the SEC…

If we could ever get the SEC to focus on solving real sytemic problems rather than wasting time and money on a few hi profile scapegoats we could have saved refco investors millions…

Alan abelson (the famously skeptical barrons writer who I love) mentions this week how refco insiders sold big blocks in its IPO 10 weeks ago, obviously benefitting from founder, phillip bennett’s hiding $435m in off balance sheet debt.

For the majority of you who have not religiously followed my blog, ill repeat my proposed change for SEC rules on insider stock sales, which I believe would in one stroke wipe out and or make right billions in illbegotten gains from corp fraud.

My proposal – expand the 13G rule (which forces insiders to disgorge profits from buy-sell trades within 6 months) to also force disgorgement of all profits on stock sales during periods of corporate fraud. This would force refco insiders, esp the founder, to immediately give back their newfound riches to the innocent investors.

The alternative is years of litigation in civil and criminal courts for the founder who will a) be bankrupt and b) have hidden assets in florida real estate and swiss accounts. And his fellow insiders will undoubtedly raise a toast to him every xmas as they will never be asked to give a dollar back as they were ‘innocent’ and beyond the law.

Btw, sarbanes oxley (suxley!) won’t help injured investors one bit.

Also, let’s add the ibanks and accounting firms to this new SEC rule. Why not also force them to disgorge all fees on the IPO or annual audits to injured investors. Forget about suing them out of business. We’ll just face another version later. What we need are rules that can create clear and immediate penalties that directly benefit injured parties. Let the politicians still go after their poor bernie ebers (who probably never understood accounting anyway).

If anyone knows hoe I can ever get a proposal in front of the SEC let me know and ill do more than just whine about it!
Sent wirelessly via BlackBerry from T-Mobile.

One thought on “If I ran the SEC…

  1. A company that was not Sarbanes Oxley compliant, like Refco, should have never received the green light from the SEC (not to mention the other high-powered names involved in this mess) to go public – and thus, I believe the SEC should take some responsibility in this case.
    Investors are often the one’s gagged largely without a voice – and fall way back in the cue of retrieval – in situations like this and this screams injustice in every sense of the word.
    It appears that this is being treated just as one of the costs of doing business for many, because nobody seems to be taking this matter as seriously as it should be. Worry not that many lives have been ruined by trusting “the system” of checks and balances.
    The red flags, the serious mishandlings in the IPO launch and subsequent crash to fiscal earth only two months after Refco went public – should by its relationship of duty not put the onus as heavily on the investors (shareholders mainly as per the August 2005 IPO) as not doing their job of “proper due diligence”.
    After the Enron’s and Worldcom’s of the world, and after Sarbane’s Oxley, this put a false sense of security/protection in the eyes of Refco investors.
    For the people failing to do the most important measure of due diligence are not the refco shareholders in this case, they are those with their fingerprints all over taking this company public.
    For it should be said that Refco should have never been able to go public in the first place. With the refco playing field being littered with red flags, to such a horrid state of affairs, I believe this is a black mark on the system of checks and balances in the marketplace and I, for one, will never sink another dollar in the american markets so long as this is allowed to continue.
    Thank you for hearing my opinion on this sorry state of affairs in Refco.
    The SEC needs to step up and return all monies to investors, where it rightfully belongs.

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