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Investing 101 - Jul 7, 2006 - Printable Version
- Once Honesty is gone, Eliminating Integrity is easy
by Mark Faulk
"And if all others accepted the lie which the Party imposed—if all records told the same tale—then the lie passed into history and became truth. 'Who controls the past' ran the Party slogan, 'controls the future: who controls the present controls the past.'" ~George Orwell’s 1984
Yesterday, I wrote a commentary about how, on December 23, 2005, Chairman Chris Cox eliminated the word “integrity” from the Mission Statement of the SEC. Today, I received an email from a reader and fellow advocate, which he found on the Yahoo Fannie Mae (FNM) message board.
As it turns out, “integrity” wasn’t the first thing to go at the SEC. It seems that, sometime between the years 2002 and 2003, that another noble quality was deemed unnecessary by those whose job it is to “protect investors and maintain the integrity of the securities market.” Or should I say, those whose job it was to maintain the integrity of the securities market.
In the SEC’s annual report in 2001 and 2002, their mission statement was listed as:
"Since its creation in 1934, the SEC's mission has been to administer and enforce the federal securities laws in order to protect investors, and to maintain fair, honest, and efficient markets."
Then, in their 2003 annual report, they “modified” it to read:
"The mission of the Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation."
Notice anything different? THEY ELIMINATED HONESTY!!! And it was no accident, because they acknowledged that the prior goals of the SEC, which seemingly hadn’t changed since its inception, were no longer relevant. They deleted the phrase “Since its creation in 1934,” as an admission that the new, improved SEC is no longer concerned with honesty OR integrity.
But wait a minute. In its annual reports, dating back to at least 2001, the SEC never did mention the word “integrity,” and gave up on feigning “honesty” four years ago. So what is “the truth”? Looking at the annual reports of the SEC, it now appears as if the SEC’s original mission statement, as I, and thousands of others who have quoted it over the past few years remembered it, never existed:
“The primary mission of the U.S. Securities and Exchange Commission (SEC) is to protect investors and maintain the integrity of the securities market."
That’s the one that I was told by the SEC themselves was changed on December 23 of last year to read instead:
“The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.”
Wasn’t it? Yesterday, I was quoting Orwell’s Animal Farm, and today, I feel as if we’re living another Orwell classic, 1984, where history is rewritten on a continual basis, and all records of the past are then changed to match the current version of “the truth.”
"If the Party could thrust its hand into the past and say this or that even, it never happened—that, surely, was more terrifying than mere torture and death."
~George Orwell’s 1984
Now, did the SEC’s Mission Statement ever say anything about integrity, or did we all just make that up? I mean, it says right there in their own annual reports in 2001 and 2002 that: “Since its creation in 1934, the SEC's mission has been to administer and enforce the federal securities laws in order to protect investors, and to maintain fair, honest, and efficient markets." So it’s clear that up until they decided that “honesty” was no longer needed in regulating the stock market, their mission hadn’t changed since the SEC was created in 1934, and according to their own annual reports, that mission never included “maintaining the integrity of the securities market.”
IT NEVER HAPPENED.
I honestly began to doubt my own version of “the truth” for the second time in the past two days. Luckily, in this age of instant research, it’s easy to find out what is real and what isn’t. A google search of “The primary mission of the U.S. Securities and Exchange Commission (SEC) is to protect investors and maintain the integrity of the securities market” returned…only one match, an article I wrote for the Faulking Truth called “Who’s Looking out for You? SEC Critics Seeking Investigation.”
What the hell? Either I got it wrong, or someone had deleted all records of the past. The SEC Mission Statement never was to “maintain the integrity of the securities market,” and their annual reports confirmed “the truth.”
"Day by day and almost minute by minute the past was brought up to date. In this way every prediction made by the Party could be shown by documentary evidence to have been correct; nor was any item of news, or any expression of opinion, which conflicted with the needs of the moment, ever allowed to remain on record. All history was a palimpsest, scraped clean and reinscribed exactly as often as was necessary."
~George Orwell’s 1984
IT NEVER HAPPENED.
How could that possibly be? Luckily, a follow-up search, after removing the periods from “U.S.”, revealed hundreds of thousands of matches. Whew…I’m not going totally crazy after all. The SEC’s Mission Statement, the real one, the one that they tried to eliminate from history, first by changing it in their annual reports and pretending as if it had always been that way, and then by changing it officially…seemingly in the dead of night…and deleting all references to it on their own website, the real one did exist.
The references to the “real SEC Mission Statement” are generally unflattering, letters to or about the SEC questioning the true integrity of the SEC, such as former SEC attorney Gary Aguirre’s letter to Chairman Cox, dated September 2, 1005, in which he said:
“I am compelled to write to you today, my last day with the Commission, out of a sense of duty to the Commission’s mission—to maintain the integrity of the financial markets and to protect the investor. Unfortunately, my supervisors--as far up the chain as I can see—have lost sight of the mission in the above matter.”
So what was Cox’s response to Aguirre’s assertion that the SEC had compromised their integrity, and that they “lost sight of the mission”? He changed the mission statement, and eliminated the requirement for integrity altogether, which was easy, since honesty had already been abandoned years before.
Here are a few other online references to the original SEC Mission Statement, along with the links to the sources. These are mostly from other sections of the federal government’s websites, along with one from the DTCC’s website. They must not have gotten the memo. You might want to “save” a few of these before history is completely “palimpsest, scraped clean and reinscribed.” I’ll begin with an excerpt from Senator Paul Sarbanes of the Senate Banking Committee, discussing the appointment of Chris Cox as the new SEC Chairman in July of 2005. It’s a good one:
http://banking.senate.gov/index.cfm?Fuseaction=Hearings.Testimony&TestimonyID=944&HearingID=166
Statement of Paul S. Sarbanes
U.S. Senate Committee on Banking, Housing, and Urban Affairs
"Pending Nominations - Morning Session"
July, 26 2005
I want to note the importance of the Securities and Exchange Commission to our capital markets, and to the millions of Americans who rely on the integrity of those markets. The Commission itself has defined its primary mission in succinct and forthright terms: "to protect investors and maintain the integrity of the securities markets."
The Commission has noted:
"As more and more first-time investors turn to the markets to help secure their future, pay for homes, and send their children to college, these goals are more compelling than ever."
Now more than one in every two U.S. households is invested directly or indirectly in the markets. The U.S. markets play a critical role in world capital markets. And it is the integrity, the transparency and the efficiency of our capital markets that have made them the envy of the world.
In order to carry out its mission, the SEC must provide vigorous oversight of the markets, and vigorous enforcement of our securities laws. The Chairman, of course, in a sense functions as the chief administrative officer of a large organization - an organization which, consistent with the Commission's Strategic Plan, adheres to the highest standards of integrity, fairness, accountability, teamwork and excellence.
Oh, here’s another good one. This one is from the General Accounting Office, whose motto is (at least the least time I looked), ironically, “Accountability Integrity Reliability”:
http://www.gao.gov/new.items/d02302.pdf
United States General Accounting Office
GAO
Report to Congressional Requesters
March 2002
SEC OPERATIONS
Increased Workload Creates Challenges
Background
SEC’s primary mission is to protect investors and the integrity of the securities markets. SEC seeks to (1) promote full and fair disclosure, (2) prevent and suppress fraud, (3) supervise and regulate the securities markets, and (4) regulate and oversee investment companies, investment advisers, and public utility holding companies. It works to fulfill this mission through various divisions and offices. In 2001, GAO issued a report that addressed many of the human capital challenges SEC faces.
And here’s one, from an organization called “fairness.com” (I know, the ironies are running rampant) that links the SEC’s Mission Statement back to its source…which leads you directly to the "altered" Mission Statement instead:
http://www.fairness.com/resources/relation?relation_id=6325
Securities and Exchange Commission (SEC)
Self Description
January 2002: "The primary mission of the U.S. Securities and Exchange Commission (SEC) is to protect investors and maintain the integrity of the securities markets. As more and more first-time investors turn to the markets to help secure their futures, pay for homes, and send children to college, these goals are more compelling than ever." http://www.sec.gov/about/whatwedo.shtml
And a few more, just for “history’s sake”:
http://www.dol.gov/ebsa/related_resources.html
U.S. Department of Labor
Employee Benefits
Security Administration
Securities and Exchange Commission
The primary mission of the U.S. Securities and Exchange Commission is to protect investors and maintain the integrity of the securities markets. The laws and rules that govern the securities industry in the United States derive from a simple and straightforward concept: all investors, whether large institutions or private individuals, should have access to certain basic facts about an investment prior to buying it.
http://www.fda.gov/bbs/topics/NEWS/2004/NEW01019.html
FDA and SEC Work to Enhance Public's Protection from False and Misleading Statements
The Food and Drug Administration (FDA) is announcing new measures designed to improve the manner by which FDA assists the Securities and Exchange Commission (SEC), whose primary mission is to protect the investing public and maintain the integrity of the securities market.
And finally, just for the fun of it, here’s a link to a speech from former SEC Chairman William Donaldson, where, if you fast forward a couple of minutes, you can hear him say:
“These initiatives, coupled with others underway at the SEC will enhance the integrity of our markets and help restore the investor confidence.”
http://www.house.gov/banking_democrats/10_03_05SECCFTCPenaltiesRpt.pdf
I’ll close once again with a quote from George Orwell’s 1984, this one is the most important statement of all.
"Until they become conscious they will never rebel, and until after they they have rebelled they cannot become conscious."
Here are the SEC’s other versions of their Mission Statement, as referenced in their annual reports (so you know it’s the “truth”):
2001
"Since its creation in 1934, the Commission's mission has been to administer and enforce the federal securities laws in order to protect investors, and to maintain fair, honest, and efficient markets."
sec.gov/pdf/annrep01/ar01fm.pdf
2002
"Since its creation in 1934, the SEC's mission has been to administer and enforce the federal securities laws in order to protect investors, and to maintain fair, honest, and efficient markets."
sec.gov/pdf/annrep02/ar02fm.pdf
2003
"The mission of the Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation."
sec.gov/pdf/annrep03/ar03about.pdf
2004
"The mission of the SEC is to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation."
sec.gov/about/secpar/secpar04.pdf#sec1
2005
"The mission of the sec is to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation."
sec.gov/about/secpar/secpar2005.pdf#sec1
(Editor’s note: A special thanks to Carl Kiefer for sending me the links to SEC annual reports, and to the poster who originally posted them on the Yahoo Fannie Mae (FNM) message board, and who goes by the appropriate name reality_as_truth.)
Mark Faulk is the Editor of The Faulking Truth, and the author of the upcoming book entitled "The Naked Truth: Counterfeiting the American Dream," due out in August, 2006. For more information on the book and on the stock market scandal, go to http://www.faulkingtruth.com , and to pre-order your copy, go to http://www.theownersgroupinc.com/cart/
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