The Zenith of Congressional Hypocrisy

I was riveted by Harry Markopolos' testimony before the House Financial Services Committee about his unsuccessful efforts to alert the SEC to the Madoff scheme. Too bad that Jimmie Stewart is no longer available to play him in the inevitable movie.

Mr. Markopolos testified about what many of us already knew: The SEC is a captive of the industry it is supposed to regulate. At one point he stated: "You could fly the entire staff of the SEC down to Fenway Park in Boston, have them spend the afternoon there, and they still couldn't find first base."

The cruelest blow was reserved for FINRA which purports to be "...the largest independent regulator for all securities firms doing business in the United States." Harry would "...give the SEC an A+ for incompetence and FINRA an A+ for corruption."

The Committee then heard the pathetic testimony of SEC officials, who were like lambs led to the slaughter. The tension and outrage in the room was palpable.

Where's the hypocrisy?

Mary Schapiro, formerly the head of the "corrupt" FINRA, recently was unanimously confirmed by the Senate as the new Commissioner of the SEC.

Ms. Schapiro has never seen a pro-investor regulation she did not shoot down. Under her tenure, FINRA ran a biased and rigged mandatory arbitration system which victimized investors who suffered due to broker misconduct. When academics sought access to arbitration data from FINRA, Ms. Schapiro refused to provide it. She knew what would be exposed in the broad daylight of public scrutiny.

Now that posturing for the cameras is over, it will be business as usual at the SEC.