SEC Denies Goldman Sachs Charges Were Timed by Government

The Securities and Exchange Commission (SEC) is being accused by lawmakers of playing politics in light of its recent charges against Goldman Sachs. Some are arguing that the charges, which are very serious, were presented to the public to deliberately fit the timing of President Obama's recent financial reforms. By having a high-profile scandal to wave in front of the public, lawmakers contend, it is easy to remind Americans that Wall Street bankers are dirty crooks who need to be controlled. Many believe that the government is using Goldman to indict all of Wall Street.

The company is accused of trying to sell its investors a package of mortgages it expected to default. As the mortgages were being sold, Goldman affiliates were buying credit default swaps, or insurance products that would pay big if the homeowners were unable to make their payments.

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Top 20 Financial Villains

Alan Bond (not pictured in this illustration) was sentenced in September of 2002 for cheating clients of his financial services out of millions of dollars. An Ivy League graduate of Dartmouth and Harvard Business School, this popular Wall Street figure had been featured as a Black Enterprise expert at the magazine's events and on prominent television shows.

Through his criminal mismanagement of client funds, many hard-working employees of large institutions were cheated out pension monies. When a member of the financial upper class steals the honestly-earned income of the middle class, you know you have a morally corrupt crook on hand.

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Top 20 Financial Villains

Bernie Madoff needs no introduction. A man who lost $50 billion in investment funds through blatantly fraudulent activity, his lies and manipulation have harmed thousands of lives irreparably. His schemes may cause federal probing into the workings of hedge funds, unearthing more corporate culprits who used Madoff to create profits through illicit means.

Top 20 Financial Villains

"In the 16 years since his release from prison, disgraced junk-bond king Michael Milken has beaten prostate cancer, raised hundreds of millions of dollars for medical research and reshaped an image tarnished by a 1990 conviction for securities fraud," according to the Los Angeles Times. At the same time, this former king pin of Wall Street embodied the epitome of corporate greed that flourished during the '80s, which seemed to place making money above any moral expedient. Milken served in prison from March 1991 to January 1993 and paid $650 million in fines for the felonies of stock parking and stock manipulation.

Despite these acts of redemption, his site illustrates the fact that Milken is more interested in clearing his name than fully admitting the horrid nature of his crime -- using the market unfairly to his advantage at the expense of the entire investing community.

Top 20 Financial Villains

Former CEO and chairman of Enron Kenneth Lay was convicted on 10 counts of securities fraud and conspiracy for the now infamous scandal that not only brought down his firm, but also cost investors billions of dollars. The Enron episode was a nail in the coffin of the public's trust in corporations to act in the best interests of the communities they serve. Lay died on July 5, 2006 before his sentencing scheduled for October could take place.

Top 20 Financial Villains

Former CEO of Tyco International L. Dennis Kozlowski was convicted in 2005 of spending more than $400 million of his company's money to support a high-flying luxury lifestyle. Kozlowski spent $1 million alone on a birthday party for his wife at the time, pretending the party was a shareholder meeting to justify the cost to Tyco.

Kozlowski maintains his innocence, claiming that none of the spending was hidden and that all his compensation, however extravagant, was approved by the company. He is currently serving eight years and four months to 24 years in prison for misappropriation of Tyco funds. Maybe in that time he will develop an inner sense of conscience.

Top 20 Financial Villains

Jeff Skilling was the CEO of the Enron Corporation in 2001. (At that time, Lay stilled served as chairman.) On May 25, 2006, he was convicted of 28 felony counts including conspiracy, insider trading, making false statements to auditors, securities fraud and insider trading.

Skilling was sentenced to 24 years and 4 months for his crimes and fined $45 million. He is currently serving his term, but is facing a resentencing. Will he be given a chance at a shorter sentence after flagrantly cooking his company's books and losing investors billions? Unfortunately, it looks like up to nine years will be shaved off his sentence.

Top 20 Financial Villains

Charles Keating, Jr. is remembered not-so-fondly as the poster "boy" of the savings and loan scandal that rocked the financial world in the late '80s. Now 85, Keating served four and one half years for multiple state and federal charges of fraud, racketeering and conspiracy related to the fraudulent mismanagement of the American Continental Corporation and the Lincoln Savings and Loan Association.

Of particular note is the fact that Keating encouraged 23,000 bank clients, many retired people, to pour their savings into securities his company created, knowing they were extremely risking -- without explaining the risk. His convictions were overturned in 1996, but the government bail out necessitated by Keating's crimes cost American citizens $3.4 billion in taxpayer dollars.

Top 20 Financial Villains

Kevin Ingram was a high-flying financier with a Stanford MBA when he was arrested in 2001 for laundering money for terrorists, including Osama Bin Laden. "A protégé of former U.S. Treasury secretary Robert Rubin and one of the financial world's rising stars," Ingram was convicted in July of the same year, just 52 days before the infamous 9-11 attacks.

Top 20 Financial Villains

Joseph Jett was at the center of one of the biggest bond scandals in history. Once a star trader, Jett recorded massive profits while at Kidder Peabody by exploiting a flaw in the firms accounting system. In actuality he had lost the firm $300 million. When Jett's manipulations came to light in 1994, the resulting bad press led the parent company of the firm, GE, to sell Kidder Peabody to Paine Webber.

After being sold, the name Kidder Peabody was dropped, and the brand was history. Jett may not have harmed many investors directly, but he did single-handedly bring down a company with a 130-year history. After being fined, barred for life from trading and forced to pay restitution in 2004, Jett maintained that he did nothing wrong.

Top 20 Financial Villains

Ivan Boesky is famous for saying: "I think greed is healthy. You can be greedy and still feel good about yourself." This attitude made him a major player in the shocking insider trading scandals of the '80s, in which he and his cohorts used secret information to buy stocks in total disregard for trading laws. After his conviction for making $200 million through illegal trades, Boesky was fined $100 million, served two years in prison and has been barred from working in the securities industry for life.

Hopefully, by getting caught and being fully prosecuted, Boesky's case has deterred at least a few Wall Street insiders from using their special knowledge to take advantage of a market intended to serve all.

Top 20 Financial Villains

The accusations against the SEC are not completely unfounded. It does seem logical that fraud charges against a major firm would lead the public to believe that Wall Street reform is necessary. With this reform, President Obama plans to install greater consumer protections to minimize the risks that banks can take and to provide greater oversight on transactions that are undertaken by bankers and Wall Street traders.

Republicans are not generally in favor of the reform but rather tend to support the interests of wealthy Americans. They are fighting Obama's plans already, in addition to fighting the SEC. Republican Sen. Charles Grassley of Iowa recently requested and released information about dozens of SEC employees who have been accused of watching pornography on the job. Some think that these charges were surfaced in order to discredit the SEC.

Obama is in for a tough battle. The GOP is going to resort to dirty tricks, and so will the Democrats on Wall Street's side. African Americans should get behind the Obama financial reforms, because African Americans were the most victimized of all ethnic groups during the mortgage-induced financial crisis. Subprime loans, high unemployment and home foreclosures have hit our community the worst, so we should be the first ones to back the president's finance reform legislation.

Lawrence Watkins is the CEO of The Great Black Speakers Bureau and an M.B.A. student at Cornell University.