Good point, Greg Newton (Nakedshorts). Compare Bear’s friends song vs. mine.
(Singing) You’ve gotta have friends
Yet another bud should soon be nipped from the senior ranks of the US Securities and Exchange Commission, with David Nelson, head of its Miami office, joining the ranks of those nominated for disciplinary action by inspector general David Kotz.
"The Securities and Exchange Commission failed to “vigorously” enforce securities law when it closed an investigation into how Bear Stearns Cos. came up with values for certain debt, the agency’s inspector general said in a report Friday." 
All you need to know?
"Mr. Kotz’s report on the Bear matter charges that David Nelson, head of the SEC’s Miami office, contacted Bear Stearns’ outside lawyers in August 2007 and told them the SEC was dropping an enforcement case against Bear involving allegations that the investment bank overvalued certain securities.
‘Christmas is coming early” this year, and “Bear Stearns can keep their money,’ Mr Nelson told Bear lawyer Michael Trager, according to the inspector general’s report. Messrs. Trager and Nelson had worked together at the SEC in the 1980s, the report states. [Emphasis added]."
Interestingly enough, August 2007 was a matter of weeks after the imploding hedge funds story broke (pun intentional); had Bear Stearns been charged with overvaluing securities then, the action would likely have greatly accelerated the market’s price discovery function. Better yet, had the staff recommendation been acted on when it was originally made in 2005, it may well have prompted investors to take a more skeptical view of valuations generally, and Bear Stearns’ valuations specifically.
Trager is a partner in the Washington DC office of Arnold & Porter where “he chairs the firm’s preeminent securities enforcement practice and co-chairs the firm’s securities enforcement and litigation practice group.”
Regrettably, and somewhat curiously given the easy availability of such delicacies as ‘Audit of Premium Travel’ and earlier Bear Stearns reports, neither particularly flattering of the SEC’s performance in monitoring that firm or its peers, Kotz’s latest encyclicals have yet to be posted to the SEC website. They must be running out of pixels.
Source: SEC Watchdog Faults Agency in Bear Case
by Kara Scannell
The Wall Street Journal Oct. 11 2008
Earlier on NakedShorts
Unless your lawyer’s a pal of mine
Oct. 8 2008
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