[jon_hendry]

He gives one example, of an SEC investigator who got fired just for trying to talk to John Mack, now running Morgan Stanley, about a suspected case of insider trading. (An associate of Mack suddenly started buying a company's stock in huge amounts, shortly before the company was acquired, and made $15 million. The acquired company had been a client of Credit Suisse. John Mack interviewed at Credit Suisse just before this, and had been leaning on his associate for a piece of another deal. The implication being that Mack picked up some info at Credit Suisse about the upcoming acquisition, passed it to his buddy, in exchange for a piece of the other deal, which I think made Mack about $10 million.)

Morgan Stanley had a bunch of their lawyers pressuring the SEC above the investigator's head. Most of those Morgan Stanley lawyers were former SEC or DOJ bigwigs themselves. As a result, the investigator was fired, even though he had recently received sterling reviews. The fired guy eventually won a $750k wrongful dismissal suit against the SEC.

[brc]

With all respect, this is absolutely small fry in the scheme of things. Insider trading goes on all the time, irrespective of market conditions. Insider trading did not cause the financial collapse. This type of story is likely to happen in any decade you care to mention, and is not indicative of the wider culture of taking big bets based on other people's money, and getting richly rewarded for it.

[jon_hendry]

No, but it is an indication of the "enforcement" and regulation bodies being cowed and coopted by the bankers, which certainly effects the handling of the recent clusterfuck by the same bodies.

If they aren't going to let an investigator bring John Mack in to talk about a little insider trading case, they certainly aren't going to bring him and his peers in to talk about melting down the financial system, unless their message is "can we throw any more free money at you?"

[brc]

I agree with you here, but this doesn't detract from my main original point. All of the things which caused the problem were totally legal at the time they were done. So while side-issues like this are criminal and deserve to be punished, the actual things that caused the problems were completely legal. The Sec investigators couldn't prosecute for melting down the financial system, because it was being done within the law. The law was (and is) wrong, but that doesn't make most people on 'Wall St' criminals.

[iwwr]

Among all the things wrong with the financial system, insider trading is arguably the least important. The publicly known conflicts of interests should be alarming all in themselves.

[sethg]

Auto theft goes on all the time, but if a car that was reported stolen on Monday showed up in my driveway on Tuesday, and a cop showed up to ask me a few questions, I wouldn’t be able to get him fired.

[kls]

Good point, the fact that he went to a 4th level boss above the agent is telling. When a trader has a direct line to the top of the SEC, there is a real problem.