By Jack Kelly
The House Financial Services Committee of Congress is convening a special session to probe the ridiculousness of the Securities and Exchange Commission’s policy of settling with financial institutions they believe to have violated financial rules.
It has been exposed recently that the when the SEC pursues an action against a Company, the agency has a propensity to permit the Firm to settle without admitting any wrongdoing.
The practice hit the limelight after federal court judge Rakoff threw out a $285 million settlement the SEC made with Citi.
U.S. District Judge Jed Rakoff admonished the SEC for refusing to demand any admittance of guilt when they believed that the Company was indeed guilty. Judge Rakoff blasted the regulator stating “… the SEC, of all agencies, has a duty, inherent in its statutory mission, to see that the truth emerges.”
Out of roughly 700 cases a year, 15 to 20 go to court and the rest are settled.
Poor SEC. Due to the public repulsion of Wall Street and backlash stemming from Occupy Wall Street, Congress is gleefully working together in a rare case of bipartisanship.
This is a code term for allowing both Democrats and Republicans to beat-up on the SEC, blame it for everything, and make themselves look good to voters.
Rep. Spencer Bachus (R-Ala.), the committee chairman, said the practice “raised concerns about accountability and transparency,” while ranking member Rep. Barney Frank (D-Mass.) said “the policy of signing agreements without forcing firms to admit or deny wrongdoing raises serious issues.”
“Case by case you would like to hammer people,” said Frank. “There’s one broad question – is it a sufficient deterrent? Because that’s what you’re trying to do with these things, deter bad behavior.”