Sunday, November 30, 2008

SEC Buries Negative Report, By Releasing On Friday After Thanksgiving

Just last week, I explained to a friend that I always looked forward to the day after Thanksgiving because that is the day that a company that has dirty laundry to release will try to bury it by releasing the news on the Friday after Thanksgiving, since people are traveling and with families, and readership of news drops dramatically.

I then remarked, even the government will release dirt Thanksgiving weekend. So who gets the prize for releasing dirt this year? None other than the supervisor of FULL DISCLOSURE in publicly traded corporate America, the Securities and Exchange Commission.

Mark Cuban, who has recently been charged by the SEC in a bizarre insider trading case, had his turkey feast this year on Friday instead of Thursday, since the SEC served up a major turkey for Cuban to chew on and chew on, on Friday. That's when the SEC chose to bury a critical report about the organization by its Office of Inspector General, by releasing the report on the great burial day, the day after Thanksgiving. The report makes the SEC look like a bunch of thugs.

As Cuban noted after reviewing the report:

No wonder they released it on the Friday after Thanksgiving without any press release to let people know its available…

Cuban also notes this about his coverage on his blog of the OIG report:

First let me say that this has nothing to do with me, but given my interest in all things financial and the government during this financial crisis, I read with interest the Office of Inspector General’s Report to Congress regarding the SEC
OK Mark, got ya. Nudge, wink.

Cuban then goes on:

First the humorous side of the report, the SEC apparently has issues with Porn usage among employees.
and on:

The OIG investigation has found that the reports that employees are required to file when they buy, sell or own securities are not meaningfully reviewed or sufficiently checked for conflicts of interest. Moreover, there is currently no system in place for the Commission to detect if an employee who has traded or owns a security failed to properly report such transaction.
and on:

The OIG is investigating an allegation that Commission staff engaged in a retaliatory investigation of a company after it publicly complained about naked short selling.
and on:

The OIG report makes for interesting reading with ALLEGATIONS of intimidation, perjury, falsifying data to a court to get a judgment, and lots of abusive behavior within the employee ranks. Then there is the irony of their lack of a definitive policy on the distribution of material non public information.
and on:
Referrals to Department of Justice for Prosecution 6.

That's 6 SEC employees being referred to the Department of Justice for consideration of criminal prosecution. For the 6 months between April 1 and Sep 30 of this year. Out of only 3500 employees.
The always helpful Cuban closes with the telephone numbers to the OIG that should be used to report further SEC misconduct.

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