Having mastered all of its other responsibilities, the IRS was getting restless. Seeking a new challenge, they are now going to run a testing and continuing education bureaucracy for unenrolled preparers.
When a bureaucracy takes on a new role, the smart question to ask is: who wins?
The big franchised tax preparers are the biggest winners – H&R Block, Jackson Hewitt and Liberty Tax will now get to put little neon signs saying “IRS Licensed” in their windows. Yes, they will have to take on some responsibility in administering continuing education and employee testing, but they will be able to spread that cost across a nationwide business. They will find ways to streamline things so their employees will miraculously achieve government-approved competence with amazingly little effort. And they will be able to afford fixers and lobbyists to unravel any glitches that happen in the IRS preparer bureau.
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A little afterthought on Carlo di Florio’s new gig as the director of the Office of Compliance and Inspections and Examinations (“OCIE”). And no, we’re not caving to the request of some to go ape over the revolving door that is every financial regulatory agency.
Our thought is this man has absolutely no pressure heading into his new job. None. Look at the track record of his predecessor:
Lori Richards, who had headed OCIE since its creation in 1995, left the SEC last August. She was one of several high-level officials, including the enforcement director, who departed the agency after Schapiro took the helm in January 2009.
…
Kotz has detailed how the SEC bungled five investigations of Madoff’s brokerage business between June 1992 and December 2008, when the financier confessed to his sons that he was operating a fraudulent scheme. Top SEC officials have pledged to fix the problems and said they have made major changes.
So essentially he’s following 13 years of utter incompetence.
Plus, according to the Commission, Carlo was a dynamo at P. Dubs helping them build their “corporate governance, risk management and regulatory compliance practice[s]” and was a top dog for “[investigating] corporate fraud, corruption, conflicts of interest and money laundering.” So if he’s the jim-dandy they say he is, he’ll be finding fraud in his sleep. The SEC is in total rebuilding mode and he’s following over a decade of failure so is there anything he could possibly do to screw this up? A few decent busts a year and this guy will go down in history like Eliot Ness.
Well played, Carlo. Well played indeed.
Head of SEC Inspections Office Named [AP via NYT]
Bob Herz must be feeling a little blue now that his buddy Tweeds announced that he is hanging up his eyeshade.
This melancholic state has apparently led Herz to the conclusion that it’ll be okay to let banking regulators “use their own judgment” when it comes to letting banks stray from almighty GAAP:
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The public understanding of what auditors actually do is, to put it mildly, frustrating. If you were ask the average dude on the street what auditors’ responsibilities were, “Find fraud” would probably be the first thing that you would hear.
With all the public outrage against everything remotely related to finance or accounting, politicians feel like they have to do something. This usually amounts to putting pressure on bureaucrats, who in turn make rules to appease said politicians who can then point to accomplishments.
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Finally someone has had enough of the SEC’s new-sheriff-in-town act and is suing their asses for missing Bernie Madoff’s not so subtle Ponzi scheme.
Two victims are suing the House of Schape for their money that just up and disappeared, which amounts to $2.4 million. The suit also serves as a friendly reminder for the Commission that they sucked at their jobs big time for the better part of a decade.
According to the suit, the two victims, Phyllis Molchatsky and Steven Schneider, initially tried playing nice by filing administrative claims with the SEC but the Commission told them to get bent, thus allowing Molcahtsky and Schneider to sue in Federal court.
This may result in other Madoff victims filing suit as well, so our advice to M. Schape would be to call over to the Fed and to see if she can borrow that money printing machine.
Two Madoff victims file lawsuit against the SEC [Reuters]
See also: Madoff Victims Devise Hedging Strategy [DB]
That’s right! Schape and Co. are coming heavy this time bitch. They don’t know who you think you are, Mark Cuban, but you think you can just walk away from avoiding negligible losses to your net worth and get away with it? OH HELL NO.
The Commission is going to continue pursuing your alleged insider trading ass even though they haven’t been able to present a shred of evidence that you promised to sell those shares. No matter, they’ll pull something together.
Oh, and another thing Mr. Man-Child, the Commission won’t be paying your attorney fees. They realize you’re suing out of spite and regardless their hard-on for billionaires in their 50s that wear basketball jerseys, they won’t stand for it.
S.E.C. to Appeal Court Ruling on Mark Cuban [DealBook]
God bless the PCAOB. Back in 2004, they created the Office of Internal Oversight and Performance Assurance (IOPA) just in case those smartass Peekaboo inspectors were getting a little too self-righteous all over your audit.
Apparently, the fact that the PCAOB has its own internal oversight board is supposed to make all of you auditors comfortable. That assumes you knew about it in the first place. We sure didn’t know this internal affairs-esque board-within-a-board existed.
Maybe realizing that the IOPA had virtually no identity among anyone, anywhere, the PCAOB did everyone the courtesy of updating its “About” section of its website today reminding us of the internal watchdog. So whether you’ve got a legitimate complaint or you’re just seeking sweet, sweet revenge on that know-it-all dick questioning your tickmarks and indexing method, now you can give the PCAOB a taste of their own medicine.
Internal Oversight [PCAOBUS.org]
Invoking their continuing motto of “Better Late Than Never”, the SEC closed the Tyco case today as Dennis Kozlowski and Mark Swartz agreed to be banned from serving as directors or officers of a public company. The timing of this ban comes as a bit of surprise since these guys have been in jail since 2005 but we are talking about the SEC.
Since Bernie Madoff has a much longer sentence than the Tyco twins, the Commission will figure there’s no rush and he’ll retain his rights to serve as a director/officer until around 2020.
Settlement Ends S.E.C. Case Two From Tyco [DealBook/NYT]
It what amounts to a serious case of too little, too late, the SEC says that it will do more to protect investors in the wake of the Madoff scandal.
M. Schape and Co. would like you all (House Financial Services Committee) to know that they have been busy though. Working late. Working weekends. Working hard:
regulatory proposals include restricting short-selling in down markets, strengthening oversight of mutual funds, tightening scrutiny of investment advisers and making it easier for shareholders to seat directors on company boards. The S.E.C. is also working to identify emerging risks to investors, including so-called dark pools, or automated trading systems that do not publicly provide price quotes, Ms. Schapiro said.
See? Doesn’t that make you feel better? We’re the SEC, getting better at being less clueless since 2009.
S.E.C. Plans to Protect Investors More Post-Madoff [DealBook/NYT]
Another press release from the SEC today stating how they’ve thwarted yet another Ponzi scheme.
Ponzis being the norm lately we’re not terribly impressed by this but what we did find surprising was the title of the Commission’s press release: “SEC Freezes Assets of Florida Resident Stealing Investor Funds for Luxury Purchases” (that’s our emphasis).
Is the Commission making the assumption that those individuals that are actually reading the press releases need informed about what the money stolen is actually used for? Seriously, Bernie and Big Al don’t strike us Robin Hood types, even before indictments were handed out. No where in Bern’s statement at sentencing did he state:
Your honor, I’ve become increasingly despondent about the wealth gap in this country. I stole from the wealthiest individuals, investment companies, and charities possible in order to help the people that couldn’t help themselves. It was not my intention to take all my clients’ money. I merely wanted to level the playing field. I thought this method would be most effective as opposed to raising tax rates on the rich, which I’m personally opposed to.
Didn’t hear that did you? Let’s break this down: Bernie liked handjobs(and God knows what else, shudder) and Aston Martins. Stan liked doing bumps off hookers’ asses (we’re guessing here) and buying cricket teams (this is documented).
We will give the credit to the Commission for busting another scofflaw but we would now advise that knowing your reading audience is equally important.
SEC Freezes Assets of Florida Resident Stealing Investor Funds for Luxury Purchases [SEC.gov]
Having mastered all of its other responsibilities, the IRS was getting restless. Seeking a new challenge, they are now going to run a testing and continuing education bureaucracy for unenrolled preparers.
