The Wall Street Job Report

Cost Benefit Analyses Slows SEC Progress, says Schapiro

SEC Chairperson Mary Schapiro briefed the House Financial Services Committee on a range of issues yesterday. Chief among them are the cost benefit analyses being conducted in connection with new rules being promulgated per The Dodd-Frank law and other regulatory initiatives.

Ms. Schapiro said that these analyses have hampered the progress in devising the needed rules. However, they remain a necessity in the wake of a US Court of Appeals ruling last year striking down so-called “proxy access” rules.

“We firmly believe that cost-benefit analyses are very important,” Ms. Schapiro said. “One reason we need more resources is that we’re hiring many more economists” to perform the analyses.

Cost benefit analyses are used to determine the effect that new rules would have on financial firms and the markets and sometimes “the juice ain’t worth the squeeze.”

DealBook reported that the chief securities watchdog also briefed lawmakers about efforts to implement new rules governing money market rules. Such rules are needed because funds might still be subject to runs by investor looking to bail out, like in the run up to the economic tsunami of 2008.

Ex-Morgan Stanley Big Wheel Cops to Breaking Anticorruption Laws

Garth Peterson, a former real estate executive in Morgan Stanley’s China unit pled guilty to breaking provisions of the Foreign Corrupt Practices Act (FCPA)

Mr. Peterson ran the Singapore office, where he “secretly” acquired millions of dollars of property investments for himself and a Chinese government official. In return the official then steered business Morgan’s way. How do you say “quid pro quo” in Mandarin?

DealBook reports that the fallen high roller also settled a civil action brought by the SEC. Now, Mr. Peterson faces a five year jail term and a fine of $250,000 for this play. Included in the plea arrangement is his agreement to be permanently barred from the securities industry, as well as giving up his interest in the property.

The case is said to be another in a “flurry of activity” centered on FCPA violation. The law prohibits American companies and executives from “bribing” government officials in foreign countries to win business. What happened to the government official in this case is unclear.

Sun King Slated to Testify at Oracle Trial Today

Scott McNealy, co-founder of Sun Microsystems, is on the docket today in an intellectual property suit Oracle has brought against Google.

The Oracle action alleges that GOOG infringed copyrights and patents for the Java language that is widely used in internet applications. Oracle claims Google’s Android operating system was built on the Java lingo. This program was developed by Sun prior to the company being taken over by Oracle in 2010.

As has previously been reported at the Compliance Exchange, Google head honcho Eric Schmidt testified on Monday that the company did nothing wrong and that Goog was not required to license the lifted Java parts used in the Android system.

Bloomberg is now reporting that Sun and Google actually chatted about forming a partnership to co-create Android and therein lies the rub. That alliance would have required Google to license the Java source code.

US Economy Threatened by Euro Crisis and Iran, says Geithner

Treasury head honcho Timothy Geithner said that the economic recovery could be undermined by the never-ending sovereign debt crisis in the EU. This ongoing problem, coupled with continued sabre rattling by Iran, is a lingering threat to the US economy.

In an address in the rarified air of Portland Oregon at the “Portland City Club,” Geithner reportedly said, “We still live in a dangerous and uncertain world, with Europe confronting a severe and protracted crisis. The world is engaged in a critical struggle with Iran, which has added to upward pressure on oil prices.”

That being said, Geithner also believes the economy is getting stronger, but has a way to go “to repair the damage of the financial crisis,” according to Bloomberg. However, he also noted that the country faces a “fiscal cliff” at the end of the year because of tax cuts expiring and spending cuts that are needed to restore “fiscal sustainability.”

Of course, perhaps he should advise the President to stop spending money?

SEC Whistle Blower Policy Questioned by Lawmakers

The SEC slipped up in a recent securities investigation by exposing the identity of a so-called whistle blower.

This snafu prompted Sen. Charles Grassley, the ranking Republican on the Senate Judiciary Committee, to information from the securities watchdog regarding its policies to protect the confidentiality of whistleblowers who may risk their jobs or careers by playing tipster.

According to the Wall Street Journal, Grassley sent a letter to SEC top dog Mary Schapiro saying in par that  while “whistleblowers are essential to root out fraud and malfeasance,” he is concerned that the agency is not doing enough to protect their identity.

An SEC spokesperson replied that despite the WSJ’s allegations of a slip up, “no cooperating witness was revealed as a cooperating witness in the course of our investigation.”