• warning: include_once(CRM/Core/Config.php) [function.include-once]: failed to open stream: No such file or directory in /home/content/71/3913871/html/niapmicrosite/sites/all/modules/civicrm/drupal/civicrm.module on line 274.
  • warning: include_once() [function.include]: Failed opening 'CRM/Core/Config.php' for inclusion (include_path='.:/home/content/g/h/f/ghfghost/html/niapmicrosite/sites/all/modules/civicrm:/home/content/g/h/f/ghfghost/html/niapmicrosite/sites/all/modules/civicrm/packages:.:/usr/local/php5/lib/php') in /home/content/71/3913871/html/niapmicrosite/sites/all/modules/civicrm/drupal/civicrm.module on line 274.

Oops! - The path for including CiviCRM code files is not set properly. Most likely there is an error in the civicrm_root setting in your CiviCRM settings file (sites/default/civicrm.settings.php).

» civicrm_root is currently set to: /home/content/g/h/f/ghfghost/html/niapmicrosite/sites/all/modules/civicrm.

Please review the Drupal Installation Guide and the Trouble-shooting page for assistance. If you still need help installing, you can often find solutions to your issue by searching for the error message in the installation support section of the community forum.

The SEC Hearings -- The Drama Had Little To Do With David Becker


Important revelations were made at the recent Joint House Oversight and Financial Services hearing last week, but they did not come from the hearing’s intended target, David Becker, the SEC’s former top lawyer. Nor were they around the testimony of SEC Chairwoman Mary Shapiro, who was appropriately contrite as she sat before a surprisingly deferential congressional committee as she promised a re-examination of the “net equity” issue and a revote on the SEC’s Madoff recommendations. Nor did they come from Inspector General Kotz’ somewhat mechanically delivered testimony as to why Mr. Becker’s conflict of interest should be taken up by the Justice Department. This was a conflict of interest, the IG asserted, that had to do with Mr. Becker, as a Madoff victim, potentially forcing the SEC to change its perspective on the definition of “net equity” to Mr. Becker’s advantage. And even Mr. Becker, who presented himself as a compassionate, reasonable, and somewhat sympathetic target in light of what was an obvious lapse in judgment, hardly met the expectations of drama.

No, the real fireworks came, unexpectedly, from Finance Subcommittee Chair Scott Garrett, who struck out at the very process that the SEC used to arrive at their decision regarding net equity in first place – even before Mr. Becker arrived on the scene. Basing his comments on the IG report, his key messages: first, the SEC was bullied into adopting cash-in-cash-out by SIPC and their Trustee, two groups with huge conflicts of interest and much to gain financially from the use of this methodology. Second,  the SEC allowed SIPC to adopt a definition of “net equity” that used criteria and factors not allowed in SIPA law.

The upshot: the real conflict of interest had less to do with David Becker, and far more to do with SIPC and the Trustee – both making out like bandits while thousands of innocent investors were being skewered by the Trustee’s lawsuits. Something was foul.

There’s more. Garrett launched another volley this week. In a sharply worded letter Monday to Mary Shapiro, Garrett more than expressed his concern about how the SEC, SIPC and the Trustee have treated Madoff fraud victims -- he reiterated his damaging allegations of conflict of interest and requested that Shapiro hold off on any re-evaluation of the net equity method until the GAO, at his Committee’s request, had completed at least part of its investigation of the SEC, SIPC and the Trustee.

Garrett is clearly on the attack. The foul odor he smells is not from David Becker’s poor judgment. No. It’s coming from an incestuous and ignoble relationship between SIPC and the SEC, where the tumorous and purulent tail of SIPC is wagging the emaciated, hapless dog that is the SEC. It’s coming from an insulated, isolated and festering SIPC fraternity, whose sole raison d’etre is guardianship of the precious jewel of the SIPC fund, minimization of any inconvenience to their broker dealer members, and preservation of their very remunerative and comfortable status quo.

The founding principle of investor protection has been long ago buried by SIPC and the disciples of its sordid culture. One gets the clear sense that Congressman Scott Garrett is looking to find it.


* (For those not up to speed on the legalese, the “net equity” conflict revolves around how to value a customer’s account: whether to base valuations on the customer’s final account statement, or instead, a “cash-in-minus-cash-out” method which nullifies account statements. The Trustee and SIPC have chosen to nullify the account statement.)


-Ron Stein, CFP