Physician, Heal Thyself

No, this isn't going to be another gripe about Big Pharma.

Instead, it's going to be a request to the Securities and Exchange Commission to go to the nearest health-care facility and get itself a spine.

Or at least a manual on what is and is not ethical behavior.

Anyone who has read this blog more than once knows that I'm a "trust, but regulate" person. But that requires that the regulators at the very least regulate themselves (to quote one of those dead white guys, the Latin poet and satirist, Juvenal, "Who watches the watchmen?").

Today's New York Times carries a story by Louise Story and Gretchen Morgenson reporting that

After Bernard Madoff's giant Ponzi scheme was revealed, the Securities and Exchange Commission went to great lengths to make sure that none of its employees working on the case posed a conflict of interest, barring anyone who had accepted gifts or attended a Madoff wedding.

Which makes complete sense. Except that the SEC made one giant exception: its general counsel, David M. Becker, "who went on to recommend how the scheme's victims would be compensated, despite his family's $2 million inheritance from a Madoff account." Mary L. Schapiro, SEC chairwoman, was the lone commissioner aware of Mr. Becker's conflict of interest.

Excuse me?

The reporters dryly note that this "provides fresh details about the weakness of the agency's ethics office".

Ya think?

According to Mr. Becker's lawyer, Mr. Becker had notified senior SEC officials about the inheritance. Among those informed was William Lenox, at that time the agency's designated ethics officer (Mr. Lenox left the SEC earlier this year).

Mr. Becker's financial interest in the Madoff matter was revealed when he and his brothers (who shared in the inheritance) were among those sued by Irving H. Picard, the Madoff trustee, who is suing many Madoff clients to redistribute money.

This is yet another black eye for the SEC, which has by now had so many that it is starting to look punch-drunk. The Madoff matter alone has generated several, starting with why the SEC never investigated Madoff properly in the first place, despite being warned several times that his investing "genius" seemed more like grifting.

According to the article, "Two House subcommittees have called a hearing for Thursday about the incident with Mr. Becker." Stay tuned...