STOCK MARKET WATCH -- Friday, 26 September 2014

[Demeter]

31. The SEC Coverup for Private Equity: Worse Than for TBTF Banks

http://www.nakedcapitalism.com/2014/09/sec-coverup-private-equity-worse-tbtf-banks.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29



In a mere four months, the SEC has gone from calling out widespread abuses in the private equity industry to not just walking back its detailed criticisms, but actually enabling a coverup.

Readers may recall that in May, SEC inspection chief Andrew Bowden gave what was by regulatory standards a blistering speech describing widespread misconduct in the private equity industry. His detailed account followed SEC Chairman Mary Jo White setting forth uncharacteristically clear-cut details of private equity abuses in testimony to Congress.

Bowden was specific about the extent of the abuses by general partners, which included what amounts to theft, as in taking funds they weren’t entitled to. Bowden categorically stated that the bad acts implicated over half the firms they’d examined. Moreover, he described in considerable detail the types of grifting they’d found so far. Privately, the SEC has made clear that the abuses weren’t concentrated at small fry but were across the spectrum of firms, including the very top players... a careful reading of Bowden’s recent remarks indicate that the SEC isn’t merely retreating from its earlier bold talk. It appears to be actively enabling a massive coverup of these abuses. Mind you, this is even worse than the SEC’s limp-wristed enforcement of financial-crisis-related misconduct against the too-big-to-fail banks.

The real message is that private equity is too powerful to discipline.

DETAILS AT LINK

IT REALLY SOUNDS LIKE THE TITANIC IS GOING DOWN