Wall Street Meets Main Street at the Courthouse

With the gap between Wall Street and Main Street never wider, the American public is left wondering who truly is looking out for their interests. The Wall Street lobbying machine is working overtime to dilute real regulatory reform. The financial regulators themselves are increasingly exposed as overmatched and incompetent, if not worse. Where can the American public turn to get some relief? Slowly but surely the courts are taking action to address the gross injustices that the American public has had to bear at the behest of Wall Street and with the protection of Washington.

Make no mistake, the slope of the mountain of injustice is quite steep. Furthermore, we are just starting the trek. Little doubt there should be many stops along the way. You can rest assured that the Wall Street lawyers and financial lobbyists are working diligently to put out the smoldering ruins of fires and campsites which wreaked havoc upon our economic landscape. There appears, however, to be mounting evidence that the Wall Street fires were fed by Washington and financial regulators looking the other way.

Bloomberg highlights some initial progress made on behalf of the American public in the fight for truth, transparency and integrity on our financial and economic landscape. This morning Bloomberg writes, Judges Punish Wall Street as Regulators Just Talk About Reform:

As the White House and Congress debate how to regulate financial firms to avoid another economic crisis, judges have assumed the point position in punishing Wall Street for causing the worst recession since the 1930s.

The executive and legislative branches have been discussing reforms such as more regulation of hedge funds and transparency for derivatives as a response to the financial crisis that began a year ago. As that battle with a reluctant Wall Street inches forward about how to prevent another disaster, judges are taking the first steps toward the same goal, punishing executives and issuing rulings with national impact.

I can only hope the momentum in the courtroom accelerates given the slow and painstaking rope-a-dope game being played out between Wall Street and Washington. Wall Street clearly wants a ‘mulligan’ from the excessive improprieties that led to our current economic crisis. The courts are starting to get wise and adjudicating otherwise. Bloomberg highlights some recent rulings for the public and against the Wall Street-Washington cabal including:

» Last week, U.S. District Judge Shira Scheindlin threw out a key free-speech defense that credit raters had used for years to thwart investors’ fraud suits, knocking $1.5 billion off the market value of Moody’s Investors Service Inc.and the parent of Standard & Poor’s LLC.

» In sentencing imprisoned con man Bernard Madoff June 29 to the maximum penalty of 150 years in prison, U.S. District Judge Denny Chin described Madoff’s crimes as “extraordinarily evil.” He made the sentences of Madoff’s various offenses run consecutively, rather than the more common concurrent method.

» Frank DiPascali, Madoff’s chief financial officer, got harsh treatment too even though he was helping prosecutors incriminate Madoff’s other co-conspirators. After pleading guilty in August to helping his boss carry out a $65 billion Ponzi scheme, he was immediately sent to jail as a flight risk by U.S. District Judge Richard Sullivan. The judge ignored a request by prosecutors to grant DiPascali bail to make it easier for him to cooperate than if behind bars.

» Former Monster Worldwide Inc. Chief Operating Officer James Treacy, who had proposed no prison time for what his lawyer called a “technical” crime, was sentenced to two years in jail for improperly accounting for backdated stock options.

» After a jury found Eric Butler, a former Credit Suisse Group AG broker, guilty of securities fraud on Aug. 18, U.S. District Judge Jack Weinstein in Brooklyn told lawyers on both sides that, in their sentencing briefs, they should put Butler’s acts in the context of “how pernicious and pervasive was the culture of corruption” on Wall Street that “brought our financial system to its knees.” (emphasis added)

The pot that is the American public is boiling. The public is now getting wise that the improprieties and malfeasance not only occurred within financial firms but also within the regulatory structure as well. Bloomberg succinctly but appropriately writes:

Judges are also demanding more accountability from regulators and are urging rule changes to punish wrongdoers.

Will we get real accountability from the SEC? Do not bet on it. Why? The SEC receives immunity. Where and when may we begin to get accountability within our regulatory framework? When FINRA is compelled to open its books and records. In the process, we may learn if this Wall Street SRO neglected to fulfill its duty to protect investors given conflicts of interest and business relationships stemming from its internal investment portfolio.

The American public deserves nothing less.

About Larry Doyle 522 Articles

Larry Doyle embarked on his Wall Street career in 1983 as a mortgage-backed securities trader for The First Boston Corporation. He was involved in the growth and development of the secondary mortgage market from its near infancy.

After close to 7 years at First Boston, Larry joined Bear Stearns in early 1990 as a mortgage trader. In 1993, Larry was named a Senior Managing Director at the firm. He left Bear to join Union Bank of Switzerland in late 1996 as Head of Mortgage Trading.

In 1998, after 15 years of trading and precipitated by Swiss Bank’s takeover of UBS, Larry moved from trading to sales as a senior salesperson at Bank of America. His move into sales led him to the role as National Sales Manager for Securitized Products at JP Morgan Chase in 2000. He was integrally involved in developing the department, hiring 40 salespeople, and generating $300 million in sales revenue. He left JP Morgan in 2006.

Throughout his career, Larry eagerly engaged clients and colleagues. He has mentored dozens of junior colleagues, recruited at a number of colleges and universities, and interviewed hundreds. He has also had extensive public speaking experience. Additionally, Larry served as Chair of the Mortgage Trading Committee for the Public Securities Association (PSA) in the mid-90s.

Larry graduated Cum Laude, Phi Beta Kappa in 1983 from the College of the Holy Cross.

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