SEC Inspector General to Investigate Timing of Goldman Sachs Case

Inspector general acknowledges suspicious timing.

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By Peter Roff, Thomas Jefferson Street blog

David Kotz, the inspector general of the U.S. Securities and Exchange Commission said late Friday that he would conduct an investigation into the timing of the SEC’s decision to move forward with a civil suit against Wall Street powerhouse Goldman Sachs.

Kotz acknowledged the investigation was the result of request made by California GOP Congressman Darrell Issa, the top Republican on the House Oversight and Government Reform Committee.

In his letter Issa charged that “The circumstances of the filing and subsequent events fueled suspicion that the Commission, or one or more of its officials or employees, may have engaged in unauthorized disclosure or discussion of Commission proceedings in order to affect the debate over financial regulatory legislation currently pending before the United States Senate.  Disclosure rules and procedures at the SEC are important to efforts to prevent insider trading and any violation would be deeply troubling.”

Indeed the suggestions that the timing of the suit was something other than coincidental have produced angry denunciations from many quarters, including from President Barack Obama himself who has categorically denied that any collusion between the SEC and the White House had taken place.

Kotz, who as inspector general is independent of and insulated from the political aspects of the agency’s functions, apparently is not convinced. “We need to understand what led to the decision to announce or bring the case on that day.  See if there was any undue influence involved and so we’ll look very carefully to investigate that and see what we determine,” he said during an appearance on the Fox News Channel.

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