Courtesy of Larry Doyle.
I sent a copy of this letter to the members of the Editorial Board of The New York Times this morning.
To the Editorial Board of The New York Times
Re: Sunday Editorial, The Dark Pool Iceberg: Lawsuit Against Barclays Shows Need for More Scrutiny
Dear Mr. Rosenthal, et al,
I was pleased to read your editorial in this past Sunday’s New York Times regarding the recent lawsuit brought by New York Attorney General Eric Schneiderman against Barclays for engaging in a ‘pernicious fraud’ within its equity division and specifically in the operation of its dark pool.
The allegations made by AG Schneiderman are supported by information provided by whistleblowers who had previously worked at Barclays. The outrage by investors and the public should be justifiably long and loud. The erosion of trust and confidence in Wall Street broadly speaking will continue to undermine our economy. We all suffer in the process.
I fully concur with your assertion,
“There is no reason to believe that this kind of wrongdoing is limited to Barclays.”
As you certainly well know, you never find just one mouse. You conclude your editorial by writing:
“In a financial system that is presumably built on the integrity of its public markets, banks should not be entitled to operate increasingly in the shadows, where even large and savvy clients can get mugged. Financial regulators need to force more order and transparency on the system, and to prosecute the wrongdoing that comes to light in the process. Mr. Schneiderman has shown the way, but he can’t do it alone.”
You are correct in this summation. But let’s stop right here and ponder that this editorial is being written in June 2014, a full 6 years past the onset of the economic crisis and a full 4 years since the passage of Dodd-Frank, legislation promoted as reforming Wall Street. How is it that the practices alleged in this lawsuit might come to pass and would seem to have persisted for a number of years?
I will tell you.
Lying, fraud, self-dealing, blatant misrepresentations and more as laid out in this lawsuit against Barclays are symptoms of a Wall Street that remains out of control. What is the cause that needs to be addressed, exposed, and rectified? A financial regulatory system that covers the spectrum of being ill-equipped, incompetent, captured, and corrupted.
While those within the regulatory system itself all too often cry for more funding in order to provide meaningful investor protection, let’s not be so naive as to think that merely throwing money at regulators who have shown themselves to be ineffectual, captured, and corrupted will solve our problems.
While some might think that painting our financial regulators with a bright red “C” for being corrupted is overly aggressive, two of America’s most highly acclaimed financial whistleblowers used that very term to do just that.
On February 4, 2009, renowned Madoff whistleblower Harry Markopolos in the midst of Congressional testimony proclaimed that Wall Street’s self-regulator FINRA was deserving of an A+ in corruption. On January 7, 2014 upon the release of my book (In Bed with Wall Street; Palgrave MacMillan), SEC whistleblower Gary Aguirre is quoted on page 144 as saying:
“I saw how SEC management would create a fictional rationale for not pursuing the investigation against John Mack . . . Somewhere between the third and fourth fictionalized account, I understood just how deeply the corruption was embedded in the (SEC) Enforcement’s management.”
I concur with you again in your assessment that Mr. Schneiderman can not clean up Wall Street on his own. The simple fact is monitoring Wall Street is the purview not primarily of AG Schneiderman but rather the SEC, FINRA, and other financial regulators including the Federal Reserve and CFTC.
Interestingly enough, in January 2013 FINRA itself made a public vow that it would shine a light on the nefarious activities that have been shown to transpire within Wall Street’s dark pools. Yet, despite this public proclamation, FINRA has done little to provide meaningful protection against the ‘pernicious fraud’ alleged by AG Schneiderman.
For those who look closely, the evidence of regulatory capture and corruption is screaming. Having written the aforementioned book that details and documents significant examples of lying, fraud, misrepresentation, and self-dealing within these regulators, I call on you to shine the wide-angled lens of transparency that comes from your elevated position on the editorial board of The New York Times into these regulators and also upon our public officials atop Capitol Hill.
If you want a host of starting points, I am more than happy to have my publisher send each member of the editorial board a copy of my book. The index alone will provide plentiful material and referenced documents to begin the process of rooting out the cause that allows symptoms such as Barclays shark-filled dark pool to perpetuate.
Those within the power bases on Wall Street and Washington certainly would prefer to have firms such as Barclays pay token fines while maintaining the captured and corrupted status quo. But as you well know, Wall Street and Washington are not representative of America.
I exhort you to uphold your mandate to pursue, promote, and protect the public interest with a full blown expose of our captured and corrupted financial regulators and public officials. In doing so, you will also need to expose their cronies on Wall Street who welcome them on the other side of the revolving door and fill their campaign coffers with funds that strike most Americans as little more than payoffs that ultimately allow ‘pernicious frauds’ to continue.
I look forward to your response and welcome the opportunity to engage you in this pursuit.
Sincere regards,
