Corrupt pols -> impotent SEC -> Massive insider trading and financial fraud

As if you needed more proof the stock markets are rigged:

Samuel Wyly and Charles Wyly — billionaire brothers in Texas who have spent millions funding political campaigns — committed violations of federal securities laws and fraud by using offshore accounts to secretly trade the shares of public companies whose boards they sat on, reaping more than $550 million in profit, according to a Securities and Exchange Commission complaint filed Thursday.

The politically-active Wylys, who have been generous donors to Republican causes over the years, have faced questions in recent years — including a Senate probe — about whether they ran an extensive network of tax shelters.

How does this happen? Well, ridiculously rich guys eager to become absurdly rich guys pay millions — which they call “pocket change” to politicians to protect them from pesky SEC investigations. And with all that pocket change raining down on Congress, the SEC is starved of resources. Salaries are low and bodies are few, so it’s staffed with young lawyers who don’t know jack about financial markets… esp. how to spot fraud and manipulation.

This is the SEC that couldn’t spell Madoff after Harry Markopolos spotted them the M, A, D. O, F, and F… and wrote them detailed letters — year after year — explaining Madoff’s scam.

The SEC is a failing mom-and-pop shop surrounded by 100 Wal-Marts. They’re completely outgunned. So the Wylys were able to steal over $500 million using a fraud that “lasted 13 years.”

So far, we’ve caught only the guys whose sinister names — “Made Off” and “Wily” — gave them away. How many more crooks there must be who’ve escaped justice thanks to their less obvious names!

Posted by James on Saturday, July 31, 2010