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After Avoiding Prosecution of Wall Street Firms, Obama Officials are Rewarded with Wall Street Jobs

By Matt Bewig | AllGov | April 8, 2013

The revolving door between Wall Street and its government regulators has been spinning at warp speed lately. Two recent cases involve high-level officials whose jobs were to regulate Wall Street’s practices and prosecute Wall Street’s crimes. Despite the massive and systemic fraud that led to the financial collapse of 2008, both failed to win a single major enforcement against Wall Street, and now they are being rewarded with lucrative jobs there.

Mary Schapiro, who took over a demoralized Securities and Exchange Commission (SEC) that repeatedly failed to head off financial disasters involving Bear Stearns, Lehman Brothers and Bernard Madoff, did not win a major civil action against any Wall Street executive who was part of the subprime mortgage scam that led to the crash during her four years as SEC chair. One low point came the day federal judge Jed Rakoff refused to approve SEC’s $285 million settlement with Citigroup because, just as with Goldman Sachs, SEC failed to get an admission of wrongdoing. Schapiro did open a new tips database and a whistleblower office.

Lanny Breuer worked the criminal side of the street as head of the Justice Department’s criminal division for the past four years, yet he failed to win a single major criminal conviction against a Wall Street executive. He resigned shortly after a recent “Frontline” documentary implied that he had been ineffectual in bringing justice to the financial industry. His public defense of his own lack of criminal prosecutions was also widely panned.

Now both are returning to the other side: Schapiro has taken a job as a managing director and chair of the governance and markets practice at Promontory Financial Group, which advises financial firms on regulation, while Breuer is going back to Covington & Burling, a major law firm that defends financial clients, as vice chair of the firm. Although salary data are unavailable, both can be expected to earn at least $500,000 annually from their new gigs.

“It used to be called ‘selling out,’ ‘cashing in,’ or ‘influence peddling.’ Now it’s referred to politely as the ‘revolving door,’” Dennis Kelleher, president of Better Markets, a nonprofit that wants stronger regulation of the financial industry, told the National Journal. “But whatever it’s called, nothing is more corrosive to the American people’s trust in government than when former senior public officials turn their so-called public service into multimillion-dollar riches unimaginable to almost all Americans.”

Even more insidious than outright corruption, argue such critics, is the fact that the continually revolving door between Wall Street and its regulators creates a financial industry culture shared by both bankers and their regulators, who come to see themselves as part of the financial system—and hope eventually to be rewarded by the profit-making companies they are supposed to regulate and prosecute.

To Learn More:

Mary Schapiro and Lanny Breuer Give Us the Ultimate Dog-Bites-Man Story (by Michael Hirsh, National Journal)

Justice Dept. Defends Not Prosecuting Corporate Leaders for White-Collar Crime (by Noel Brinkerhoff and David Wallechinsky, AllGov)

SEC Chair Schapiro Retains a Lawyer (by Noel Brinkerhoff and David Wallechinsky, AllGov)

Revolving Door at SEC is in a Whirl as Hundreds Hired by Industry they Regulated (by Noel Brinkerhoff and Danny Biederman, AllGov)

April 8, 2013 Posted by | Corruption, Timeless or most popular | , , , , , , | 2 Comments

Revolving Door at SEC is in a Whirl as Hundreds Hired by Industry they Regulated

By Noel Brinkerhoff, Danny Biederman | AllGov | February 13, 2013

Charged with regulating Wall Street, the Securities and Exchange Commission (SEC) has become a launching pad for former agency employees—by the hundreds—to become part of the industry they once oversaw.

A new report from the watchdog group Project on Government Oversight (POGO) says that more than 400 ex-SEC staffers were working for the industry between 2001-2010.

The study also found numerous other concerns with the “revolving door” between the SEC and financial firms. These included agency workers trying to help corporations influence agency regulations, defending companies suspected of breaking the law, and helping them avoid tougher enforcement actions.

Perhaps the most high-profile concern in this arena is President Obama’s nomination of Mary Jo White to become the new SEC chief. During her most recent job at the firm of Debevoise & Plimpton, White’s clients included JPMorgan Chase, General Electric, Verizon Communications, former Bank of America chief executive Kenneth Lewis, and Rajat Gupta, the former Goldman Sachs board member convicted of insider trading.

“The revolving door is moving faster than ever,” Senator Charles Grassley (R-Iowa) said after reading POGO’s findings. “The SEC has to fix this problem once and for all. That involves more disclosure, more meaningful restrictions, and top-to-bottom application of the rules without waivers that make any restrictions meaningless.”

February 14, 2013 Posted by | Corruption, Economics | , , , , , , , | 1 Comment

Pfizer Pays $60 Million for Bribing Foreign Doctors

By Noel Brinkerhoff | AllGov | August 10, 2012

Foreign subsidiaries of Pfizer spent years bribing foreign doctors and healthcare officials to expand sales of the company’s pharmaceuticals, according to a $60 million settlement reached with the U.S. government.

The deal, brokered by the Securities and Exchange Commission (SEC) and the U.S. Department of Justice, resolves charges of illegal activities that took place in about a dozen countries, including China, Bulgaria, Croatia, Kazakhstan, and Russia.

“Pfizer subsidiaries in several countries had bribery so entwined in their sales culture that they offered points and bonus programs to improperly reward foreign officials who proved to be their best customers,” Kara Brockmeyer, an SEC official, said in a news release. “These charges illustrate the pitfalls that exist for companies that fail to appropriately monitor potential risks in their global operations.”

In China, a subsidiary awarded doctors with points for every Pfizer prescription they wrote, allowing them to redeem the points for medical books, cell phones, and other gifts. In some cases, Pfizer’s China operation bribed physicians with free trips abroad.

Pfizer officials in the U.S. reportedly learned of the bribes in 2004 and began in internal investigation that kept federal regulators in the loop on what they discovered. The company insisted its executives knew nothing about the schemes before then.

August 11, 2012 Posted by | Corruption | , , , , , , , | Comments Off on Pfizer Pays $60 Million for Bribing Foreign Doctors