I suppose you will need a subscription to read this, but here is a link.
interactive.wsj.com
In case you can't connect, here is an exerpt.
As we've been reporting, the top cop on the nation's securities beat isn't as squeamish about freebies. Securities and Exchange Commissioner Arthur Levitt has permitted trade groups, law firms, a brokerage house and some newspapers to sponsor over a dozen of his nationwide town meetings for investors and small businessmen since April 1995 (D.C. Current, May 19 and June 30). He began letting the sponsors rent meeting halls, mail invitations, buy newspaper ads and
cover other such expenses after Congress made the SEC use certain federal funds to regulate investment advisers. Previously, the agency had used this money to finance the town gatherings.
The SEC sees no big problem because it hasn't accepted the cash directly and because the events promote investor education, a noble cause. Nonetheless, it looked bad to us. And now the practice is developing a distinct aroma not unlike that of a beached fish on a hot day .
It turns out that a brokerage firm that picked up the tab for an event in Richmond, Va., volunteered its services at about the same time examiners from the SEC's Philadelphia office were poring over the records of its biggest office in Washington in December 1996, responding in part to the voluminous complaints of a whistle-blower. The SEC in February issued a ``no-action'' letter to the firm - Wheat First Butcher Singer. The probe was ended, and the whistle-blower soon
was canned for ``low production.''
Was there a connection? The SEC says no. Levitt and the staffers handling the arrangements for the meeting wouldn't have been aware of any examination, agency officials assert. Such activities don't reach the SEC board level until they mushroom into full-fledged investigations. Nonetheless, a Virginia Congressman who was
contacted by the fired whistle-blower thinks the whole thing stinks. Republican Rep. Frank Wolf on July 1 sent the SEC a verbal scalding for letting Wheat First spend anything on the public event.
As we previously reported, Levitt let the brokerage firm rent a hotel ballroom in Richmond for the gathering, advertise it in local newspapers and print invitations that displayed the securities firm's logo next to the SEC's.
I agree with agency officials. Such activities don't reach the SEC board level. If they say so, it must be so. Of course, there could be flow of "inside information" within the SEC in the form of gossip, and whah lah, Chairman Levitt finds out.
When we have access to the May 19 and June 30 issues, we'll be able to read that the SEC had been putting on public dog and pony shows for investors in the districts of the Congresspersons who "oversee" the SEC. The shows, called town meetings, had been paid for by firms the SEC "regulates".
Charles |
