Retiring Securities and Exchange Commission trial attorney James Kidney, a key participant in the 2008 suit against Goldman Sachs, used his farewell luncheon as an opportunity to air some grievances about how the organization treats Wall Street bigwigs with kid gloves. Some of his most illuminating remarks were recorded in this story at Businessweek.
The SEC has become “an agency that polices the broken windows on the street level and rarely goes to the penthouse floors,” Kidney said, according to a copy of his remarks obtained by Bloomberg News. “On the rare occasions when enforcement does go to the penthouse, good manners are paramount. Tough enforcement, risky enforcement, is subject to extensive negotiation and weakening.”
Kidney said his superiors were more focused on getting high-paying jobs after their government service than on bringing difficult cases. The agency’s penalties, Kidney said, have become “at most a tollbooth on the bankster turnpike.”
In his speech, Kidney also hit the agency for using misleading statistics to showcase its enforcement efforts. The SEC should focus on the quality of its actions, rather than try to file as many as possible just to tout its record to lawmakers and the media, he said.
“It is a cancer,” Kidney said of the agency’s use of numbers. “It should be changed.”
“I don’t think we did a very aggressive job with all the major players in the crash of ’08,” he said, noting that as a civil enforcement agency, the commission does not need to prove its cases beyond a reasonable doubt like the Justice Department does. “The SEC has a lower burden of proof and we should be pushing the envelope a bit.”
“I have had bosses, and bosses of my bosses, who made little secret that they were here to punch their ticket,” Kidney said. “They mouthed serious regard for the mission of the commission, but their actions were tentative and fearful in many instances.”
Also see yesterday’s quote of the day from Matt Taibbi: “There’s this really, kind of scary psychological moment that we’ve crossed in America where we no longer think of a certain kind of offender as appropriate for jail”.