A Massachusetts law school dean that lost money invested with swindler Bernard Madoff contends the Securities and Exchange Commission (SEC) was “willfully, horribly negligent” in failing to monitor his operation.

Now the federal judge overseeing the criminal case against Bernard Madoff has ordered the seizure of Madoff’s assets, making it impossible for victims to take action against those assets.

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Lawrence Velvel, dean of the Massachusetts School of Law at Andover, said, “The SEC’s incredible willful negligence” to not seriously investigate Madoff’s operations despite repeated red flags and written warnings of his criminality probably makes the agency liable to legal action by aggrieved investors. The SEC, he said, “has no discretion—none—to fail to follow up, with serious investigations, when presented with knowledgeable, detailed, obviously highly competent, and in many respects easily ‘checkable’ allegations of…a huge fraud that is fooling thousands of people, stealing billions of dollars, and causing horrible injustice.”

Equally bad, says Velvel, the SEC was responsible for a lot of people being sucked into Madoff in the first place, because in 1992 it publicly announced that there was no fraud.

Referring to the preponderant majority of Madoff’s victims, Velvel said, “These are not the billionaires, or the huge institutions, that could hire expensive experts in due diligence…These are the plain people who worked hard and saved all their lives, as capitalism says they should, and who…depended on their government to protect them…but were failed by it because of one of the most willfully negligent, incompetent, and perhaps even complicitous courses of action any agency has ever engaged in.”

Lawrence R. Velvel is an honors graduate of the University of Michigan Law School. He has been a government lawyer, a lawyer in private practice, and a law professor. He is the author of a book on the Viet Nam War and civil disobedience, and of many law review and newspaper articles, including humor pieces written under a pseudonym. He recently wrote a quartet called Thine Alabaster Cities Gleam, comprised of: Misfits In America; Trail of Tears; The Hopes and Fears of Future Years: Loss and Creation; and The Hopes and Fears of Future Years: Defeat and Victory. Velvel blogs at velvelonnationalaffairs.com. His blog postings have been published in Blogs From the Liberal Standpoint: 2004-2005 and An Enemy of the People.

In 1988 he was one of the founders, and from inception has been the Dean, of the Massachusetts School of Law (MSL), a school which has introduced extensive reforms into legal education and which especially focuses on providing legal education to the working class, mid-life people, minorities and immigrants. He is the editor-in-chief of, and writes the introductions for, a journal of serious thought called The Long Term View, which is published by MSL. He is also the host of an hour-long television book review show, called Books Our Time, which is produced by MSL and seen throughout New England and the Mid-Atlantic states.

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Madoff Victim Law School Dean on SEC Negligence – Failure to Investigate originally appeared on Rights Radio™ with Dr. Joyce Starr - An Independent Voice on April 21, 2009.

Pro Publica, the online investigative reporting site counts 533 institutions that took $333.3 billion in TARP money. Moreover, the current CEO of Goldman Sachs, Loyd C. Blankfein, also earned over 70 million dollars in 2007.

[In a prior MarketWatch article - "Is the rush to exit TARP a trap?" (April 2, 2009) - Weidner states: "Since the middle of March, at least five banks have said they will either not accept TARP funds or they will return the funds received with interest due to Uncle Sam. Four banks that took a combined $338 million actually returned the cash Tuesday. Officials at Bank of America Corp, which took a combined $105 billion from the program, have hinted they want to repay the funds as soon as they can, possibly this year. ... Geithner's care-free attitude about banks repaying the government early defies a truth about the program: many banks were forced to take bailout cash to cover for troubled banks that truly needed it. The government, which never gave detailed criteria about what institutions would qualify for TARP cash, intentionally tried to create confusion around the program. Pro Publica, the online investigative reporting site counts 533 institutions that took $333.3 billion in TARP money."]

Government Sachs is in control
Commentary: Investment bank has strengthened its position through bailout
By David Weidner, MarketWatch
Last update: 12:01 a.m. EDT April 7, 2009

NEW YORK (MarketWatch) — Lloyd Blankfein must be the luckiest guy on Wall Street.

Goldman hasn’t had to forfeit an ownership stake in its firm, and its shareholders — many of them management and employees — have benefited. Goldman shares trade above $100. That’s less than half of where Goldman shares traded at their peak, but far better than the $1 and $3 that AIG and Citigroup shares trade for, respectively.

Since the fall of Bear Stearns Cos. a little more than a year ago, Goldman has taken more than $20 billion in taxpayer cash through loans, payments and backstops. Goldman’s latest bailout coup was a $12.5 billion paid out of AIG’s $180 billion government cash infusion.
Until it was fully extricated, Goldman always characterized its exposure to AIG as “immaterial,” and that its $20 billion notional exposure to AIG was hedged. Turns out that it was — through government bailouts that didn’t exist when Goldman entered the contracts.
Even former New York Luv Guv Eliot Spitzer told journalist Fareed Zakaria on Sunday that he thinks something smells.

“The web between AIG and Goldman Sachs is something that should be pursued,” Spitzer said. “Why did [those payments] happen, what questions were asked, why did we need to pay 100 cents on the dollar for those transactions if we had to pay anything, what would have happened to the financial system had it not been paid?”

But the AIG-Goldman affair is just the beginning, under the policy enacted by former U.S. Treasury Secretary Henry Paulson, Goldman’s chief executive until 2006. Major competitors have failed or been diminished. Goldman already seems, if not just poised, to be dominating what’s left of the investment banking landscape.

We last visited Goldman in the early days of the Troubled Asset Relief Program, or TARP, in October. Then, it appeared Goldman would come out ahead by virtue of avoiding a major investment by a commercial bank. Merrill Lynch had just been sold to Bank of America Corp.
Five months later, Goldman’s position in the marketplace looks even stronger — its future even more brilliant.
“Goldman Sachs has the most powerful investment banking franchise and the most successful trading operation on Wall Street,” Brad Hintz of Bernstein Research wrote Friday, adding that he’s been told “new leverage limits are not expected to impact Goldman’s trading performance.”

“New leverage limits are not expected to impact Goldman’s trading performance.”

— — Brad Hintz, Bernstein Research

Hintz said Goldman is touting how it plans to avoid tighter leverage limits. For one, its trading desk can take advantage of widening bid-offer spreads. Fewer players in the marketplace mean there’s a bigger gap to exploit. Without Lehman and with a diminished Morgan Stanley, Goldman has more ability to corner a market.

Goldman’s commodities oil-trading desk has been linked to the failure of Semgroup Holdings, an oil-trading company in Tulsa, Okla., that declared bankruptcy in July 2008. Semgroup investors say Goldman had access to the company’s trading books and could have used that information against the company, according to Forbes.

That’s just the trading business. Goldman also will have less competition when it comes to underwriting stocks and bonds, advising corporate clients and providing prime brokerage services — including trading leverage — to hedge funds. Goldman ranked No. 1 among advisers with $316 million in revenue during the first quarter, according to Dealogic.
Goldman won’t rake in the exponentially growing profits that it did during the middle part of the decade — it reported $9.54 billion and then $11.6 billion in 2006 and 2007, respectively — but it will improve mightily on the $2.04 billion in returns it earned last year.

As glittering as Goldman’s recent history has been and as bright as its future looks, there is a dark cloud on the horizon. Paulson’s successor at Treasury, Timothy Geithner, is proposing a market-risk regulator that would put the regulatory squeeze on any institution deemed so big that its failure would take down the system with it.

Geithner wants to encourage break-ups and the creation of smaller institutions, said John Garvey, a risk management and banking consultant with PriceWaterhouseCoopers. Goldman, which could easily divide itself into a hedge fund, trading business, private equity shop and advisory firm, would be in the crosshairs of such a plan.

Even separated, though, why would Goldman’s roll stop? In the last year, Goldman has benefited from Paulson’s selective bailouts, a fortuitously timed ban on short selling, a liberal interpretation of bank holding company rules and soon, an easily gamed auction of distressed securities run by the government.

A conspiracy theorist might think this run of fortune has something to do with the former Goldman executives having influential roles in the Treasury Department.
Market-risk regulator? Smaller companies? Goldman will find a way around it. It just seems to have that kind of luck.

Goldman Sachs Bailout Winner Dominates Banking Landscape originally appeared on Rights Radio™ with Dr. Joyce Starr - An Independent Voice on April 8, 2009.

Topic: What are your shareholders rights when a stock you own drops like a rock, the company goes broke or shareholders are victims of massive stock market fraud/stock broker fraud?

How can shareholders reclaim invested funds and how much can can they expect to get back?

How can a stock fraud attorney help? How do you find the right stock fraud lawyer? Why would a defrauded shareholder opt-out of a Class Action suit?

Guest: Shareholder rights litigation attorney Jason M. Leviton, Berman DeValerio.

This interview took place on the RIGHTS Radio Self-Help Show – a 30 minute segment featured and syndicated on BlogTalkRadio.com. The LIVE program date has passed. However, we offer a STREAMING REPLAY below. Click the PLAY ARROW BELOW to hear the entire show.

To your shareholder rights!

Don’t miss our special Shareholder Rights Course featuring Jason Leviton. Ask your burning question. Speak with Jason directly in a private call for class members.

Stock Fraud: How to Get A Portion of Your Money Back originally appeared on Rights Radio™ with Dr. Joyce Starr - An Independent Voice on December 24, 2008.