SEC Goldman Fraud Charges: SEC Investigates Timing of Goldman Fraud Charges: SEC Cavorting with White House?

The Inspector General of the Securities and Exchange Commission (SEC), David Kotz, announced that he will investigate the timing of the SEC's fraud charges against Goldman Sachs, and presumably will look into any connection the SEC may have had with Obama administration to further his desire for financial reform. Needless to say, it is illegal for the independent SEC to cavort with the White House.

SEC

The speculation is that Goldman Sachs is on the ruse as well, and Rush Limbaugh described the theory this week:

The Securities and Exchange Commission offered Goldman Sachs a chance to take a fine over this.  They refused to do that because their position is that they have done nothing illegal, and all it is is a civil fine.  And they're going to take a hit here, there's no question, but I think they're in on it.  I think they're happy to take the hit here, pay the fine, and roll on. 

There's no way this is a coincidence, and Barney Frank is even out there saying that this fraud case will increase the chances that the financial reform bill will pass.  (doing Frank impression) "That's what he th'aid! He's not even afraid (lisping) facts." He doesn't even want to hide it. 

Rep. Darrell Issa (D-CA), the ranking member of the Committee on Oversight and Government Reform asked for the investigation. In a letter to Kotz, Issa cited The New York Times publishing information on the SEC's lawsuit before the SEC had released an official announcement. Issa claims that news of the lawsuit "leaked from the Commission via unofficial channels.

On the same date, April 20th, Issa wrote to Mary Schapiro, Chairman of the SEC. (portions)

We are writing to request that you provide documents and information to this Committee regarding any sort of prearrangement, coordination, direction from, or advance notice provided by the Commission to the Administration or Congressional Democrats regarding last Friday's filing against Goldman.

The Commission's canons of ethics require its members to "reject any effort by representatives of the executive or legislative branches of the government to affect their independent determination of any matter being considered by the Commission. Moreover, the Commission is prohibited from using its resources to influence the passage of legislation.

Nevertheless, the events of the past five days have fueled legitimate suspicion on the part of the American people that the Commission has attempted to assist the White House, the Democratic Party, and Congressional Democrats by timing the suit to coincide with the Senate's consideration of financial regulatory legislation, or by providing Democrats with advance notice. 

In fact, the aggressive campaign by Democrats in support of the legislation neatly coincided with the Commission's announcement of the suit. 

For example:

~ The Commission approved the Goldman suit in a vote that split along party lines -- a rare occurrence for approvals of enforcement litigation.

~ Before the Commission had released its announcement, The New York Times published on its website a story describing the suit.

~ Less than half an hour after the Times story's publication, Organizing for america, the successor organization to Obama for america and now a project of the Democratic National Committee ("DNC") sent millions of supporters an e-mail message from President Obama urging support for Wall Street Reform."

~ Within hours, the Democratic National Committee had purchased AdWords advertising from Google, Inc. The DNC's Google campaign fundraising advertisement, headed "Fight Wall Street Greed," appeared whenever a user ran a Google search for the phrase "Goldman Sachs SEC." It read, "Help Pres. Obama Reform Wall Street and Create Jobs. Families First!" and included a link to www.BarackObama.com, the website for Organizing for America.

There is more, but the important thing is that SEC Inspector General Kotz is launching an investigation. Click to read a pdf of the two  letters.


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