The jury is still out as to whether the SEC’s Director of Enforcement is in fact guilty of this allegation; however – this is the kind of thing that happens very, very often. It’s hard to say for sure if this guy is dirty or not…but we must be constantly vigilant and pay attention. You hear these stories all the time about regulators and certainly – legislators and their aides who do what’s in the best interest of X corporation…and a few months later – they’re working for that very company making LOTS of money. It’s called corruption….pure and simple. You have three types of regulators essentially:
#1 – You have the hard working, do good regulators who really are there to do their jobs as defined for the betterment of the American people.
#2 – You have completely inept regulators who were picked for either their indifference or their utter inability to catch white collar crimes within the banking community.
#3 – You have capable regulators who are malleable enough to “work with” the banks with an understanding that it could be very good for their future careers i.e. the bank might hire them some day.
Inspector General H. David Kotz opened the probe after a request from U.S. Senator Charles Grassley an Iowa Republican, who forwarded an unsigned letter making the allegation. Khuzami told his staff to soften claims against two executives after conferring with a lawyer representing the bank, according to the letter. Jon Diat, a Citigroup spokesman, declined to comment.
According to the letter, the SEC’s staff was prepared to file fraud claims against both individuals. Khuzami ordered his staff to drop the claims after holding a “secret conversation, without telling the staff, with a prominent defense lawyer who is a good friend” of his and “who was counsel for the company, not the individuals affected,” according to a copy of the letter reviewed by Bloomberg News.
via SEC Inspector General Probes Khuzami’s Role in Citi Settlement – Bloomberg.
Robert Khuzami explains the deal on Bloomberg TV in October of 2011.
