SEC, Cure Thyself: Congress Must Step in to Stop the Agency's 'Securities Fraud' Threat to Journalists
VIEWED FROM THE STILL-SMOLDERING wreckage of the financial meltdown, the Securities and Exchange Commission (SEC) sure seems like a failed watchdog. As the system neared collapse, the SEC actually relaxed capital standards for some of the biggest players in the so-called "shadow banking" business of arcane investment and debt vehicles, to the point that Bear Stearns, for one, was carrying 33 times more debt than capital before it imploded.
For years the SEC missed the massive Ponzi scheme of Bernard Madoff, as well as the many mini-Madoffs who emerged in his wake. And all the while, it turns out, some of its senior regulatory officers were spending working hours gazing at pornography.
Yet during this time and continuing right now, the SEC has been dogged in its pursuit of one target--a journalist.
We wrote about the case of Porter Stansberry and his eponymous newsletter in this space back in December of 2008, coincidentally the month Bernie Madoffs seam was uncovered.
As we noted then, Porter Stansberry's Investment Advisory is a little out of the mainstream of the business press, trafficking in breathless tips and speculation aimed at making money for the investors who shell out serious cash to subscribe. In 2003, Stansberry published an item reporting he'd been told by an executive of a certain company that it was about to land a big contract. In Stansberry's retelling, the executive was specific about the date, so he told subscribers there was a 48-hour window in which to make a windfall. The executive says he didn't specify a date for the deal, which did indeed occur, but a little while after Stansberry's item said it would. …