Mark McHugh

Trick or Treating at the SEC….

In Open Thread on Thursday, October 21, 2010 at 10:57 am

Some of you may remember that I applied for an SEC Bounty regarding Angelo Mozilo’s looting of Countrywide Financial in broad daylight in March 2007 (more than two years before the SEC charged Mozilo).  Now that Mozilo has settled with the SEC for an utterly pathetic less than 7.5 cents on the dollar, I can’t held but wonder who will get the 10% bounty on his insider trading.  The SEC can’t possibly claim responsibility – they were literally the last people on the planet to figure out what a slimeball Mozilo is.

Understand, I’d love for them to send me the money, but more importantly, I want to make sure that they pay the money out to someone (ideally the most deserving person who first applied for the bounty).  The public affairs division of the SEC knows of no such plans…

So far I’ve sent two unanswered emails, left one voicemail, and had one comically pointless conversation with an SEC employee named Kevin Callahan.

Here’s the emails:

To John Nester (nesterj@sec.gov)

Dear Mr. Nester,
 
The SEC recently announced a settlement with former Countrywide Financial Corp. CEO Angelo Mozilo regarding fraud and insider trading charges brought by the SEC June 4, 2009.  It is clear to everyone that the SEC ignored repeated warnings of corruption at Countrywide, including those which I personally sent the SEC in 2007. 
 
The SEC has advertised a “Bounty” program for those reporting illegal insider trading for more than 20 years.  After my initial warnings about Mozilo were dismissed by the SEC, I applied for such a bounty in March of 2007.  This brings me to two very simple questions:
1. Will the SEC be awarding a bounty regarding the Mozilo Case?
2. How much and to whom will the bounty be paid?
I left a voicemail regarding this matter at the SEC public affairs phone number, (202) 551-4120.
 
Please reply promptly,
 
Mark McHugh

Easy questions, don’t you think?

Now for Kevin’s email:

To Kevin Callahan (callahank@sec.gov)

Dear Kevin,
 
I am writing you to clarify what was said during our phone conversation at 11:00 am 10/21/2010.  The points I want to clarify are:
 
1. The PUBLIC AFFAIRS office of the SEC knows of no bounty awards, or intention of awards regarding the Mozilo case at this point. Is that true or false?

 

2. The PUBLIC AFFAIRS office is unable to identify the person or department who would definitively know the status of any award regarding the case. (True or False).  If false, please identify the person I need to contact regardeing[sic] the Mozilo case.
  
3.You were unable to describe the process the process the SEC uses in investigating an insider trading bounty case on the telephone.  Would you care to take another shot at that?  Because one gets the impression that the SEC disregards any and all complaints.  Please respond.
 
4. I want to know that my application for bounty was recieved and filed with the SEC.  Who can I speak to regarding this?

5. Can you provide links to recent SEC bounty awards?


I consider these to be very simple questions and will expect a swift reply.
 
Thank you,
 
Mark McHugh

  

10/22 Update:   I should know better than to expect a swift response from the SEC.  Kevin Callahan, who gave me his word that he would respond personally to my written questions in writing, has decided to hide under his desk instead.  After a little reminder email from me, he sent this:

 Mark – John Nester and I forwarded your name and e-mail address to an investor assistance specialist to contact you. Take care, -Kevin

Investor Assistance Specialist?  Really?   Isn’t this kind of like having someone say “You need a tailor”  when you’re shopping for shoes?  Notice that Kevin failed to identify the “specialist.” 

Do I have to tell you that Mr. Specialist hasn’t contacted me yet?

I’ll keep you posted….

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  1. Go Mark.  Geithner still proofreading his detailed and comprehensive response to your letter, I assume.

    “To date, the SEC has only paid approximately $1.6 million in awards as part of the prior bounty program, $1 million of which was authorized shortly before the enactment of Dodd-Frank.”

    http://www.metrocorpcounsel.com/current.php?artType=view&EntryNo=11489

    The $1m was for the Pequot case.  I’ve seen some suggestion that prior to Frankendodd the Boba Fett monies were only available for insider trading.  I know that was part of the case against the giant baked bean, but was that what you alleged (as opposed to the civil fraud aspect)?

    Either way, one headline says “No One Knew it Existed: The SEC’s Bounty Program”.  This would appear to include the SEC…

  2. mark, this needs to be published and publicized widely. you should receive either a pile of cash or else a good explanation from the SEC (which will be very embarrassing for them). regardless, they will inevitably be shown for the incompetent tools we all know them to be. this is what bill gross would refer to as a “win-win-win” situation.

    !!i got an idea!! write your congressman and ask for his help. hell, write the friggin’ new york times. this is a great story no matter what goes down.

  3. “mark, this needs to be published and publicized widely….”

    Ouch, Doc! We both know that my blog is wildly unpopular, but ouch, nonetheless.

    Know anyone called Mr. Pitchfork, attorney-at-Law?

    As I said, of course I’d like the big payday, but I think the more important point is that the SEC has to be shamed into doing the right thing….always. I wish I had recorded my conversation with Kevin Callahan, it was so full of Fruedian moments. At one point, I said “Is the bounty program real?” and he said “No…I mean…” I’ve had more meaning interaction with Greeters at Wal-Mart.

    Thanks for your suggestions. On one hand, I’d like to just get a lawyer, but I know the first thing I’ll be told is, “Don’t write about it anymore.” Exposing these people for the cowardly hypocrites they are is more important than my own comfort (plus I really get a kick out of it).

  4. Hey Michael,

    Yes still waiting on a reply from Turbo…..

    I don’t remember how I learned about the bounty program, but initially, I just wrote to the SEC to say, “Can’t you clowns fucking see this????” When it became apparent that, no, they couldn’t see it, I applied for the bounty on the chance that no one else had. One of the interesting things you learn from blogging is that people don’t follow through very often. People will read an article, but rarely click on important reference material. Everyone knows about Harry Markopolos’ letter to the SEC, but how many people actually took the time to read it? If you do, it becomes quite clear that people like Hank Paulson had to be aware of what Madoff was up to.

    Anyway, I’m glad to hear from you. Thanks for continuing to drop by. I haven’t had much time to write recently.

  5. sorry, mark. didn’t mean to cause offense (obviously) like mr. callahan, i also slunk off in shame and hid under my desk after reading your reply ;-)

    but no, i don’t know any mr. pitchfork, j.d.

  6. mark, it just occurred to me that I visit your blog more than YOU do. ;-)

  7. SShhhh……

    OK, that’s probably true, but there’s a couple reasons for that. I spend a lot more time reading than I do writing (as you do, I’m sure). I know when I haven’t written anything new, so I don’t see much point in coming here and re-reading what I wrote (besides, when I do, I spot all kinds of Typos, misspellings, grammatical errors, mixed metaphors and general stupidity – all of which is very bad for my self-esteem).

    All comments get emailed to me, so I don’t miss any discussions and I don’t get the feeling I’ve been staring too long in the mirror….

    The weirdest part is when I look at the search engines terms that bring people here. I should probably title every article “Windows 7 sucks!” if I wanted more traffic, because that half-assed rant get hits everyday from frustrated Microsoft customers. I wish I could say I planned that, but no. You should see the crazy shit people do searches on. “Make love in the ass with an eskimo” is one that always springs to mind (and it’s the “make love” part that disturbs me most). So a lot of my traffic comes from sickos, who aren’t the least bit interested in anything I have to say. It’s depressing (in a funny sort of way).

    If you lived here, you’d be afraid to come home too!

  8. as usual, the visit back was worth it (indeed, i lol’d) have a great day, mark.

  9. I love it Mark, good luck with this, if the specialist shows up with a big butterfly net you better run, LOL.

  10. Thanks, Gomp!

  11. I’d like to start some video documentation of this, your blog is great… think we could eventually compose something more for the masses?

  12. Jochra,
    Thanks, and sorry for the delayed response (I wanted to think about this), but considering that I haven’t been able to get my own wife the slightest bit interested in what I’m trying to do here, it’s pretty hard for me to imagine a big audience….

    I guess I don’t think any of this is about me, it’s about our country and how it’s slipping away through poor reasoning and ignorance.

    Take this post for example, it’s not about how smart I am for figuring out what a crook Mozilo is, it’s more about how obvious it should have been to the SEC, how long it took them to take action and how inadequate those actions were.

    The Countrywide fraud will cost over $100B easily, in my opinion. And the person most responsible is going to pay a $22MM fine?

    Despite my writing style, it’s not funny to me, and I want anyone who thinks justice was served deported.

  13. Mark,

    This response was delayed by seeing the same recent post on the thumb view of your blog since the beginning of the month, I haven’t stepped in to check it out until now.

    Not that it is about you…

    As you “go through the motions” I feel the pain, the relentless exposure of broken systems…
    After a while it may just be a natural reaction to find the humor, one of those final grasps on fighting off a case of the crazies and general paranoia. You bring the humor out, while walking the walk that most of us would pass on or just don’t have time for. Perhaps the “main-stream me” is more entertained than anything… no offense, but it’s a little of a Michael Moore experience.

    I believe that once something is exposed for the joke that it is, it will eventually be discarded as such… hopefully Palin’s reality show platform does all the work for us.

  14. In recent months, I’ve watched tensions escalated in Greece and Ireland. What bothers me most is those protests pit working men against one another. I derive no more satisfaction seeing cops get hurt than I do protestors. I’ve got no problems with street cops. Keeping order and preventing destruction is what they’re supposed to do, and I’ve got no problem paying taxes for them. They’re not the ones responsible for the problems, they’re doing their job.

    It’s the higher echelons of justice that have failed us, and justice is what we need government for most. If the front line cops understood this, they’d be on our side, and the paranoia would shift to the real criminals, where it belongs. And they should be very, very afraid.

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