[Policing Wall Street]
The Securities and Exchange Commission's so-called victory over Goldman Sachs was nothing more than the SEC throwing an easy case. As usual the SEC protected the thieves. Remember Bernard Madoff? Madoff could not have flourished without the protection of Arthur Levitt, former Chairman of the SEC, and the SEC itself.
In previous articles which appeared in The Black Star News, Goldman Sachs and SEC Put Meyer Lansky To Shame, (August 22, 2010) and Exposing Goldman Would Collapse Wall Street Again, (August 26, 2010), I have demonstrated that Goldman Sachs violated Section 12(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934. But the SEC did not charge Goldman with violating these provisions of various securities laws. Instead the SEC charged Goldman with violating Section 17(a) of the Securities Act of 1933- which is almost identical with Section 12(a) of the Securities Act.
Section 17(a) of the Securities Act of 1933 reads in the relevant part: "It shall be unlawful for any person in the offer or sale of any securities or any security-based swap agreement.....
(1) to employ any device, scheme or artifice to defraud, or
(2) to obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or
(3) to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser.
This section is identical with Section 12(a). So why would the SEC use Section 17(a) of the Securities Act instead of Section 12(a)? Simple. The SEC was protecting Goldman Sachs from lawsuits seeking the return of your pension money. "What?" a reader might inquire. Yes;protect Goldman instead of you, the American public for whom the Securities Act of 1933 was crafted to protect from hucksters.
The reason is that the SEC has brought lawsuits against Goldman in Federal District Court of the Southern District of New York. And federal judges in this jurisdiction do not recognize the right of individuals and corporations to seek legal redress under Section 17(a) of the Securities Act. Federal Courts in this jurisdiction and in other states have recognized the right of the SEC to sue under Section 17(a) (15 USCS Section 77q), but not the right of individuals to sue. Individuals must sue under other provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934.
Here is one interesting ruling, which proves that the SEC threw the case. "Section 17(a) of the Securities Act is essentially the same as Section 10(b) of Securities Exchange Act, except that Section 10(b) and Rule 10b-5 are broader in that they apply to purchase and sale of securities." Jackson v Oppenheim (1974 Southern District of New York) 411 FSupp 659.
Remember that term "essentially the same."
In Ferland v Orange Groves of Florida, Inc. (1974 Florida) the Court stated: "It was not intended that Section 15 USCS Section 17q (Section 17a) should give rise to private right of action."
In Scharp v Cralin & Co., (1985 Florida) 617 FSupp 476, the Court ruled: "Congress did not intend to create private right of action under 15 USCS Section 17q."
In the Southern District of New York, where the SEC charged Goldman in a civil suit, the Court ruled: "Private right of action for securities fraud does not exist under 15 USCS Section 17q(a), in suit by investors against sellers of limited partnership units, because legislative history reveals no congressional intent to create civil liability." Bruce v Martin (1988) 691 FSupp 716.
In California the Court ruled: "Section 17(a) of Securities Act of 1933 provides no private right of action for client suing broker for false statement about value of bonds." Schriner v Bear, Stearns & Co., (1986) 635 FSupp 373
In Utah the Court ruled: "Corporation purchaser's claims of fraud in sale of security fail under 15 USCS Section 77q, since Section 77q grants no private right of action." Leiter v Kuntz (1987) 655 FSupp 725.
In the Southern District of New York the Court ruled: "Securities fraud claims against investment firm are dismissed because neither 15 USCS Section 77q(a) nor Section 78o(c)(1) confer or imply private right of action. Center Savings & Loan Association v Prudential-Bache Securities, Inc., (1987) 679 FSupp 274.
In the Eastern District of New York the Court ruled: "No private right of action exists under 15 USCS Section 77q for fraud in offer and sale of securities, because implication of such right would allow circumvention of Supreme Court restrictions on similar actions under 15 USCS Section 78j and avoid detailed procedural and substantive limitations on Sections 77k and 77l, which expressly provide for civil liability." Cohen v Goodfriend, (1987) 665 FSupp 152.
The reader can now understand that the SEC does not protect the American public. The SEC protects Goldman Sachs.
The pensions of decent hard-working Americans mean nothing to the SEC. Goldman steals your money because the SEC permits Goldman to steal your pensions.
