Why Can't the SEC Crack Financial Cases? The Peace Corps?

Who knew that working as a lawyer for the Peace Corps was a stepping-stone to becoming the Inspector General of the Securities and Exchange Commission?
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Following up on my article Why Does the SEC Have Such an Abysmal Record Solving Financial Cases? one of my readers emailed the following:

I was reading your blog comments on the SEC and it reminded me of something that I have always found outrageous - like in the Peter Sellers movie "A Shot in the Dark" where he plays the part of the incompetent police Inspector Clouseau, and the criminal perpetrator wants to keep him in charge of the case because his incompetence lessens the chance of finding the truth.

In a similar vein, I think, is the fact that David Kotz, the Inspector General of the SEC, was recruited from the PEACE CORPS (he may be honest and mean well, but what experience in uncovering sophisticated financial crimes would he have gained there? It's like someone doesn't really want a competent investigator in charge.) Kotz did uncover some sort of "evidence" of insider trading by SEC lawyers but nothing has come of it!!!

Well, I learn something new everyday -- oftentimes thanks to my readers. Who knew that working as a lawyer for the Peace Corps was a stepping-stone to becoming the Inspector General of the Securities and Exchange Commission? Don't get me wrong here. I am not trying to disparage the Peace Corps. From what I understand, it does a lot of good around the world. However, I have never known it to be a place to train lawyers how to solve complex financial cases at the SEC.

No wonder the SEC is having a hard time solving financial crimes involving complex derivatives, mathematical finance, financial engineering, stochastic calculus, complex structured transactions, quantitative analysis, insider trading, SPVs, SIVs, flash trading, proprietary trading, statistical analysis, mathematical modeling, numerical analysis, hedge funds, Ponzi schemes, Bernie Madoff, AIG, Goldman Sachs, etc., etc., etc.!

This is really scary! Folks, we are in serious trouble!

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