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ICYMI – April 11

A collection of stories from SmartBrief publications and around the web…

“One last thing before I go…”: This retirement speech by James Kidney, a former trial lawyer at the Securities and Exchange Commission, made waves this week for the shots he takes at the sometimes sheepish leadership at the Commission and revolving door ambitions of some staffers. “The revolving door is a very serious problem. I have had bosses, and bosses of my bosses, whose names we all know, who made little secret that they were here to punch their ticket. They mouthed serious regard for the mission of the Commission, but their actions were tentative and fearful in many instances. You can get back to Wall Street by acting tough, by using the SEC publicity apparatus to promote yourself as tough, and maybe even on a few occasions being tough, if you pick your targets carefully.”

Kidney’s speech includes a few more daggers like the one above. The speech is also pretty darn funny.

And juuuuust in case you need an example: I am not sure if James Kidney asked for volunteers to become the living, breathing (and writing) example of his revolving door diatribe, but if he did this guy must have cut to the front of the line. Does Russell G. Ryan really think the public can be convinced that “by any fair measure” the SEC has become “bold and unrelenting?”  Most people are clamoring for the SEC to get tougher. And then Ryan offers up this choice nugget. “While the SEC still can’t put people in jail, the financial and reputational damage from SEC civil prosecution is now almost as bad as from criminal prosecution.” Really? I don’t see too many fraudsters lining up to do time instead of cough up their cash. And I am pretty sure most drug dealers would prefer “the financial and reputational damage” of a civil trial to 20 years in the Big House.  Wanna know who Russell G. Ryan is? He is the former assistant director of the SEC’s division of enforcement, who James Kidney might say “punched his ticket” at the SEC and sprinted out the revolving door to go make a bundle defending those accused of financial wrongdoing.

A funny take on HFT that just might make you go … Hmmmm: Gary Silverman from the Financial times offers up a pretty witty column on how high-frequency trading firms should help foot the bill for the Lincoln Tunnel. “The bigger pay-off would come from public relations. I suspect that one of the reasons books of the Flash Boys sort have such impact is that so many people see our financial businesses as playing a parasitical role, feeding off the activities of others, rather than bankrolling real things with social benefits. Kicking in some money for public works could function as an antidote to such anti-Wall Street sentiments.”

Speaking of the Flash Boys debate: I find it sort of surprising William O’Brien, the president of BATS Global Markets, has not attracted more criticism for the performance he turned in during his debate with Brad Katsuyama and Michael Lewis on CNBC. For a few reasons:

  1. His own exchange had to issue a correction about some of his on-air statements – statements that were critical to his argument. So O’Brien either isn’t fuller aware of how his own exchange operates, or he went on live TV and “misspoke” about how BATS operates. There is also another name for “misspeaking” on TV…
  2. If you feel like your firm’s reputation is under attack and your defense strategy involves going on TV and belligerently shouting down everyone else, you probably need a new strategy.
  3. One of the more interesting aspects of the CNBC kerfuffle is what happened during the next segment. The network welcomed Sen. Ron Wyden, D-Ore., but its cameras kept cutting away to Brad Katsuyama as he walked off the set and onto the floor of the New York Stock Exchange. Obviously, the NYSE floor traders have loads of reasons to not be considered friends-of-BATS, but they certainly gave Katsuyama – the head of a rival exchange – a hero’s welcome.
  4. A hot topic in finance over the past few weeks has been the concern/panic among advisers regarding what they should tell clients who might read Flash Boys and start asking pointed questions about their trades. Those advisers have very good reasons to worry. If you are an investor and you watch the O’Brien-Katusyama-Lewis debate on CNBC, who comes off as the epitome of the slick, fast-talking Wall Street guy who is out to rip you off: William O’Brien or Brad Katsuyama and Michael Lewis?