Taibbi: Allegedly SEC Policy Not To Pursue Investment Management Fraud Allegations LIke Madoff

It sometimes looks like open season on the small investor and the public at large with some very selective enforcement of the laws.

"All animals are equal, but some are more equal than others."

Why Didn't the SEC Catch Madoff? It Might Have Been Policy Not To
By Matt Taibbi
May 31, 5:20 PM ET

More and more embarrassing stories of keep leaking out the SEC, which is beginning to look somehow worse than corrupt – it's hard to find the right language exactly, but "aggressively clueless" comes pretty close to summing up the atmosphere that seems to be ruling the country's top financial gendarmes.

The most recent contribution to the broadening canvas of dysfunction and incompetence surrounding the SEC is a whistleblower complaint filed by 56-year-old Kathleen Furey, a senior lawyer who worked in the New York Regional Office (NYRO), the agency outpost with direct jurisdiction over Wall Street.

Furey's complaint is full of startling revelations about the SEC, but the most amazing of them is that Furey and the other 20-odd lawyers who worked in her unit at the NYRO were actually barred by a superior from bringing cases under two of the four main securities laws governing Wall Street, the Investment Advisors Act of 1940 and the Investment Company Act of 1940.

According to Furey, her group at the SEC's New York office, from a period stretching for over half a decade through December, 2008, did not as a matter of policy pursue cases against investment managers like Bernie Madoff. Furey says she was told flatly by her boss, Assistant Regional Director George Stepaniuk, that "We do not do IM cases."

Some background is necessary to explain the significance of this tale...

Read the entire news story here.

A Closer Look At the SP 500 and NDX Futures Daily Charts

While this certainly could turn into something more profound, so far it is well within parameters of a pullback.

Watch the action on Monday and Tuesday in particular. The bulls will be edgy ahead of ADP on Wednesday, the Fed Beige Book, and especially the Non-Farm Payrolls report. But it is a very full week with the national ISM data coming out as well.

If we get a market break you will see it more clearly by looking at the trends on the daily charts.

If we do not, then proceed with caution, and tend to ignore any jawboning.

Gold Daily and Silver Weekly Charts - Same Old - Non-Farm Payrolls Next Week

Intraday commentary here.

Gold and silver were hit by the usual contrived selling today as I suggested they might be, since this is what they do on Fridays.

The total open interest for gold on the Comex is fallen shockingly low.  I am wondering if everyone but the rats are leaving that ship.

And it was the end of month to boot, so the funds and Banks needed to polish up the mark to market on those big short positions.

There is far too much concentration of market power in too few hands.  The regulators are somewhat deficient,  the privileged go along to get along, and the sworn representatives of the public interest are busy gettin' paid.  It's the times.  Hard times for most.

So what next. Since next week is non-farm payrolls, we should hear a bunch of nonsense about the Fed 'tapering' and concerns that the economic news will be 'too good.'

I will like to see what the wiseguys do with stocks on rally Tuesday.

I do not think the metals gimmickry will end until these jokers hit the wall. And that means a serious scandal and/or a failure to deliver in gold and silver.  

They really don't know what else to do, and they are consoling themselves with looting the markets overall in the meanwhile.   Summer homes in the Hamptons are de rigeur, and pricey.

So let's see what happens, and how this plays out.  I suspect 'not well' is in the forecasting range.

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts - End of Month Profit Taking

There will be quite a bit of economic data coming out next week, including the Non-Farm Payrolls on Friday.

Stocks have had a major run higher, a record 100 days up, without a significant correction.

Today was the end of month. Profit-taking ahead of a big economic news week was probable.

I will like to see what they do on 'rally Tuesday.'

Although it may not mean much I own no stocks at this point.  I am not short.  I am watchful.

Economic Storm Clouds Ahead - Reich

Institutionalized Fraud

As you know I said yesterday that Fridays are the days on which they smack the metals.

And on Tuesdays they ramp stocks.

And so on, and so on.

No wonder the BRICs are so upset. No wonder the rest of the world is appalled.

This is not price discovery.

This is mere anarchy. This is a broad menu of corruption. This is moral hazard.

This is institutionalized fraud.

Overcome by greed, they have no shame. And their pride knows no bounds.

They do not even bother with pretense any more.

I think we all know how this is going to end.

US Total Public and Private Debt As a Percent of GDP from 1916 to Present

"The bold effort the present bank (Second National Bank of the US) had made to control government, the distress it has wantonly produced...are but premonitions of the fate that awaits the American people should they be deluded into a perpetuation of this institution or the establishment of another like it."

Andrew Jackson


"What a crazy time we live in. Domestic politics have devolved into an ongoing hostage crisis in which the opposition party threatens to blow up the financial universe every six months or so, and the leading political minds in the country can't figure out how to keep this from being a permanent feature of our budgetary process.

Meanwhile, global monetary policy is drifting in the direction of semi-permanent stimulus, and no one has any idea how it all ends. It's two different runaway-freight-train action movies going on at the same time. God help us."

Matt Taibbi, The Mad Science of the National Debt

Chart courtesy of Ralph Dillon at Global Financial Data.

Gold Daily and Silver Weekly Charts - Coiling, Coiling... - They Shoot Gold On Friday's Don't They?

Gold and silver popped higher this morning as weak to bad economic news persuaded the markets that Zimbabwe Ben will not taper his wick anytime soon.

GDP for Q1 was revised downwards to 2.4% which was a miss.

Unemployment claims came in at a whopping 354,000 and continuing claims remained stubbornly high at 2,986,000.

And finally pending home sales came in very light at 0.3% versus 1.5% expected.

In Ben Bizarro world, bad news is good, because that means the Fed will keep oozing its sweet monetary sugar to the one percent.

And so the metals rallied, because the smart money knows that the jig is up, despite the histrionics that seek to persuade us otherwise.

Still the small specs are staying out.  I was speaking to some traders today and they think silver is going lower to test 18 and won't step in until then. 

When and if gold breaks the downtrend, they will become frantic and start bidding up gold and silver, after they cover their shorts.  But let us rather wait for this.

When will it break the downtrend? A major failure to deliver would certainly do it. lol.

When it is perceived to have done so on the charts, we will know.  I am not so sure even moving back into the long sideways consolidation is going to do it.  We need a higher high and higher low on the intermediate chart quite badly to turn the sentiment around. 

For now, even after this little bounce of the last two days, all is still gloom.

Singapore Gold Premiums Hit Record High on Tight Supply - Reuters