Neurological Correlates

IG report after report detailed the dismal state of federal agencies, and after an especially depressing testimony given by the Madoff whistleblower, I wrote, White Shoe Whistleblowers – Forget the regulators, just put up “madoffisaponzi.com” February 4th, 2009

Well, the whistleblower fairy has now arrived: Zerohedge.

Zerohedge is a blog I read for financial news and analysis. I understand about 30% of it.

At the risk of being sued for copyright infringement, here’s a really long quote:

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Since FINRA and the Securities and Exchange Commission believe in going only after $1,000 insider traders with the full weight of their enforcement teams, yet ignore major market manipulation in futures and other markets, Zero Hedge wanted to present readers an opportunity to be heard by the market’s regulators.

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I take this opportunity to welcome any and all readers to provide information they believe captures wrongdoing in the financial system – in the absence of objective, unbiased and fair external regulators, it is the responsibility of everyone, but most notably insiders, to cleanse the system.

Zero Hedge will filter the data and forward our work product directly to appropriate Attorney General offices and local FBI branch offices. In retrospect, approaching the SEC and FINRA is futile, as they are both as much an integral part of the system as the perpetrators they are supposed to protect against. We’re slowly learning that fact. And we are very, very pissed off.

So…

Dear CDS trader talking on the phone to your sales coverage discussing insider information on a deal while your bored analyst is eavesdropping…

Dear Senior Vice President at the strip club boasting to your subordinates how you misspent tens of thousands of taxpayer and investor dollars on strip clubs and prostitutes currying favor for the client, to catch that elusive multi-million deal so you can buy the third vacation home you will never frequent…

Dear General Counsel receiving sexual favors from the blonde assistant in exchange for promises of advancement that never come…

Dear Chief Executive Officer having an affair with the lady at the cosmetics section in that 5th Avenue store, while your wife and 3 children wait at home…

Dear retail broker guaranteeing your 70 year old client that investing in this particular BBB+ rated CDO will never lose money, just to hurry up and do the trade in the next 5 minutes…

Dear sell-side analyst telling your equity salesmen over shots of Grey Goose at Marquee just how crappy the REIT that you just upgraded is…

(and yes, you all know who you are)

…Please look well around you, and pray that you did not piss off any of the people close to you, who know every move you make, and every word you speak… sleep well tonight, because tomorrow your face just may make the proverbial front page of the Wall Street Journal…or Zero Hedge if the former is just a little conflicted.

Man o man. This is it. Check out the comments on that post.

Zerohedge will make FOIA requests, send in complaints, report to the appropriate Attorneys General, and bang the pots and pans.  Sunlight being the best disinfectant and all that.

There is a bigger picture:  Videos from Iran (maybe no effect, but still); now posting the whistleblower proof. . .

Here’s my wish list for the whistleblower fairy:

1.  Institutional shareholder liability to minority shareholders.

2.  Federal corporations law. Hey, patents do it.

3. Transparency in all trades everywhere, so you can see who’s moving the markets.

4.  For us retail folks televise shareholder arbitrations or at least make the transcripts public. (Zerohedge, videos? ) Apparently the no-forced shareholder arbitration legislation is dead in the water.

5.  Brains scans for everyone who’s a fiduciary: No D&O liability insurance with out ‘em; and post in the regulatory filings to let shareholders determine if the white matter tracts are sufficient to govern a company. Hey, you do a background check, why not do a brain check?

6.  The tail numbers tracked.

7. A line item in every regulatory filing: how much money does this company earn from taxpayers? (Gov’t contracts, medicare reimbursement, loans, free rent, whatever). A corresponding Federal web site where you can click on a company name and see all the Federal money they receive from anywhere.

8.  The financial equivalent to the FDA — you have to prove your financial instrument is safe and efficacious for a particular indication, and you can’t promote off label, and you can’t even give out free pens or lunches.

9. Enforcement compensation tied to public good, not just to numbers of actions.

10.  The Federal equivalent of a SLAPP lawsuit – in California it’s “Strategic Lawsuit Against Public Policy”. If you’re sued to shut you down, and you’re exercising a 1st amendment right, you can file a sue right back and demand to know why you’re being sued.  (This doesn’t work for adverts, etc.)