SEC Door, Spinning Mightily, Smacks Investors – Bloomberg 08-04-13

Salient to Investors:

William D. Cohan writes:

The appalling but unsurprising news that Robert Khuzami, the former enforcement director at the SEC is joining a prominent Wall Street law firm at a $5 million-plus salary is the latest example of the corrupt relationship between money and power in the US.

Senator Carl Levin said this about Deutsche Bank’s mortgage group in a 2011 report: “Because the fees to design and market CDOs ranged from $5 to $10 million per CDO, investment bankers had a strong financial incentive to continue issuing them, even in the face of waning investor interest and poor quality assets, since reduced CDO activity would have led to less income for structured finance units, smaller bonuses for executives, and even the disappearance of CDO departments, which is eventually what occurred.”

Khuzami’s enforcement division was particularly toothless, and the SEC, under Khuzami’s watch, gave Deutsche Bank a pass.

The revolving door between Washington and the SEC is won’t change soon.

If anything was guaranteed when Robert Khuzami went to Washington, it was that his tenure there would result in a very happy ending – for him. Too bad it comes at the expense of the rest of us.

Read the full article at http://www.bloomberg.com/news/2013-08-04/sec-door-spinning-mightily-smacks-investors-william-d-cohan.html

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