THE BIZOP NEWS

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Greg Newton, the author of the Naked Shorts Blog, who wrote about fraud and hypocrisy in the hedge fund world, died at the begining of this month.

Felix Salmon wrote: "Greg single-handedly disproved the notion that bloggers couldn't be aggressive reporters. He was an irreplaceable role model to us all; the econoblogosphere has lost a true pioneer."

Seeking Alpha wrote: "Greg's witty and biting critique of hedge fund industry hubris proved altogether prescient over the course of the past year.

Our thoughts are with Greg's loved ones at this time.

May he rest in peace."

And Casandra Does Toyko wrote of Greg Newton: "His bullshit detection skills were of the highest order, coupled with an unparalleled no-nonsense wit and punchy literary-style that always brought a smile to my face, typically accompanied by audible laughter, as I am certain it did to all readers, except perhaps those that he skewered. "

I knew Greg through his blog, enjoyed his humour and had a few email conversations with him.

So today, when the SEC announces it "proposed rules to limit short selling during down markets, but comments from two Republican commissioners signaled tussling ahead:, it is appropriate to recall what Greg said about the current head of the SEC.

Greg wrote, only several months ago, about Mary Schapiro:

"President-elect Barack Obama will today announce that Mary Schapiro, chief executive of the Financial Industry Regulatory Authority (FINRA), will be nominated as chairman of the US Securities and Exchange Commission. FINRA, the securities industry's largest self-regulatory organization, was formed last year in the merger of the former NASD Regulation (which she had joined as president in 1996) and the regulatory arm of the New York Stock Exchange. 

Schapiro took the NASD-R's money after putting in 15 months as chairman of the Commodity Futures Trading Commission; before that she was, from 1988-1993, a member of the US Securities and Exchange Commission, including a short stint as acting chairman early in the Clinton administration.

Schapiro has troubled these pixels but once, when we reported that in 2003, during a period when she was opining vociferously on hedge fund-related broker-dealer disclosures and the adequacy thereof, her valiant sleuths swept through the offices of Bayou Securities LLC in Scamford, Conn. 

There, they found $8500 worth of allowing "two individuals to execute transactions...without first obtaining registration as equity traders..." and failing "to update written supervisory procedures reasonably designed to achieve compliance with said regulations..." The missing however many hundreds of millions it was by then quite escaped their attention as, boxes all checked and wrist-taps to come, the sleuths boarded the train back to Boston.

Nobody else has spent so long at such high levels of the long captured US securities regulation complex. She has been a big part of building the regulatory problem for two decades; Stockholm Syndrome means she is unfit to be part of the solution."

Greg pointed out that while Schapiro was the head of NASD, they missed Scammy Sammy and his Bayou Securities Hedge fund scam:

"Thus, NASD allows you to establish that your broker or broker-dealer has an arbitration record, but to actually find out anything about that arbitration, especially if it has occurred in the last six months, you have to pay a fee that might be immaterial to the legal big-shots but is a bit on the nose for an individual investor trying to do some due diligence.

Further, the service - and I use the word in the most sarcastic sense - doesn't appear to be available outside normal working hours. Putting aside the fee issue, would it not be too much trouble in this day and age for the good folks at SAC to put some of its lovely monies toward one of those e-commerce things that might allow interested parties obtain the information we seek - should we choose to pay for the search - and  get on with what passes for our lives?"

This is not change that we can believe in.

Greg Newton will be sorely missed,