Tuesday, June 27, 2006

From the comments 
A regular Balloon-Juice commenter makes this point:

The amazing thing about this entire pseudo-scandal is the utter ignorance of the vast majority of commenters, of the degree to which financial transactions are monitored under normal regulatory practices, both to keep the markets honest and to prevent their use as a conduit for money laundering. A lot of bloggers on both sides are a pretty good example. Have they never heard of FINCEN? And, one wonders, how do they think that the SEC starts a lot of compliance reviews under rules 14 and 16? I'd submit it has something to do with the fact that every single stock transaction goes into a database that is regularly data mined by the government for suspicious patterns. Understanding derivatives and calls and so forth is at least a little tricky, but it stuns me that so many people presume to speak knowledgeably about the markets, but are wholly ignorant of the actual mechanics of the markets and the methods used by the markets' traffic cops, which are quite simple and the thing on which the post 1933/1934 stock market (and the international market) is based.

All true. The SEC is one of the biggest data miners in the world. Institutional trades are routinely monitored, even domestically, and without a warrant. A substantial restatement of earnings is often enough to trigger a close look.

If you're so inclined, for more information on law enforcement in the financial world, check out Moneylaundering.com, based right here in South Florida.

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