SEC Whistleblower Suit: Sex, Lies, Stupidity, Oh My!!
If the whistleblower complaint I read this weekend did not have the United States Securities and Exchange Commission and Mary Schapiro as defendants, one might have thought it belonged in a cheap tabloid at a supermarket checkout.
Regrettably, given the incestuous (pun intended) activities that have been all too prevalent on Wall Street and in Washington over the last four years, this complaint brought by the recently deposed Assistant Inspector General of the SEC may be tawdry in its delivery but not surprising in its content. Let's navigate and review David P. Weber, Plaintiff vs. United States Securities and Exchange Commission and Mary L. Schapiro, Chairman.
Mr. Weber joined the SEC early this year as the Assistant Inspector General after the seemingly abrupt departure of then IG David Kotz. I have often wondered why Kotz seemed to exit the SEC in such hasty fashion. Well, Mr. Weber leaves little to the imagination in asserting that Mr. Kotz's “intimate relationships” within the Commission (including with his immediate successor as IG) and with counsel for plaintiff in the Stanford Financial scandal was a literal phrase. Weber goes so far as to say that Kotz's relations compromised SEC investigations in both the Stanford and Madoff affairs. Oh my!!
Weber's titillating testimony turns its focus on other executives within the Commission, including the COO and chair Mary Schapiro. Weber's charges of nepotism and a lack of meaningful internal controls expose the risks that the Commission presented in its daily management of operations and beyond that as well. One does not need to read very hard to understand Weber's belief that the SEC's COO utilized a “pay to play” practice. Additionally, in a scene fit for the classic movie Dumb and Dumber, Weber asserts that SEC representatives brought highly sensitive computer code and encryption data to monitor activity on our equity exchanges to a hacker's conference in Las Vegas. You cannot make this stuff up, folks.
Saving some venom for Ms. Schapiro as well, Weber paints her as a “LIAR” for perjuring herself during a presentation before the House and Senate Oversight Committee regarding the SEC's bungled attempt to move to new office quarters. Weber would not be the first to label Ms. Schapiro with the big L. Recall that Attorney Richard Greenfield did just the same in the case brought on behalf of Standard Chartered v FINRA, Mary Schapiro et al.
What did Weber receive in return for running these tales of sex, lies, and stupidity up the chain of command? A pink slip, a defamed reputation, and much more. In his defense, Weber points out that an independent investigation by an Inspector General outside of the SEC who looked into charges made against him by those inside the SEC ultimately cleared him of these allegations.
What to make of all this?
Weber's complaint really begs the question as to just what the hell has gone on and is going on within this Commission. Will Weber's complaint receive the attention it deserves? It should. Weber would not be the first whistleblower within the SEC to call out his superiors and expose serious failings and misbehaviors within the organization. Recall that none other than our Sense on Cents Hall of Famer Gary Aguirre did just the same.
In the spirit of truth, transparency, and integrity, I sincerely hope that Mr. Weber gets his day in court and that America might really learn just how the SEC could be so dysfunctional. Little wonder how and why the crowd on Wall Street runs roughshod over those at the SEC charged with monitoring their activities.
For those who care to be entertained and informed, I welcome providing a link to the complaint: David Weber vs. SEC and Mary Schapiro (click on image below to access pdf of complaint).
I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.
The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.