Wednesday, December 06, 2006

Smashed Idols

I miss the old boring SEC. I feel like the kid in the Cheap Trick song "Surrender," who observes his parents suddenly behaving strangely:

When I woke up, Mom and Dad are rolling on the couch,
Rolling numbers, rock and rolling, got my Kiss records out
Mommy's all right, Daddy's all right, they just seem a little weird
Surrender, surrender, but don't give yourself away.

At a hearing yesterday, the Senate Judiciary Committee grilled SEC staffers involved in the botched investigation of Pequot Capital Management. This was jarring for those of us who'd always experienced the agency as soothingly, parentally dull. I dealt with these guys quite a bit and occasionally attended their annual conference, "The SEC Speaks," otherwise known as "The SEC Speaks, You Snore." Those of us in the ranks of the regulated sometimes found the staffers overzealous or misguided, but we never doubted they took their jobs seriously.

The agency has gotten much more exciting. Bush’s first two Chairmen each resigned for generating too much heat, albeit in quite different ways. In recent years, spats between Republican and Democratic commissioners have produced such sharp dissenting opinions that I have to wonder if Antonin Scalia is ghostwriting on the side. In 2004 Broc Romanek noted what he believed to be the first-ever dissent to an enforcement matter. And now we have the Pequot mess.

If you haven’t followed this one, a former SEC lawyer named Gary Aguirre says his supervisors fired him to kill his investigation of suspicious trading by the Pequot hedge fund, and in particular to keep his grubby little hands off the powerful John Mack, head of Morgan Stanley. A connection between Aguirre’s removal and Mack’s Bush-friendly political philanthropy remains to be proven. But there’s no conceivable excuse for the conduct of the agency’s Inspector General, Walter Stachnik, who closed his investigation of the whistle-blowing incident without ever talking to the guy holding the whistle.

Mom and Dad, please get your act together. We don’t need SEC employees sweating before Congressional committees over sordid greased-palm deals. We already have a wild, pot-smoking, Kiss-listening federal agency for that stuff. It’s called FEMA.