Opinion

Stories I’d like to see

Lying to the SEC, A-Rod’s contract, and everybody gets hacked

Steven Brill
Feb 5, 2013 12:47 UTC

1.      Suppose a college applicant did this?

Here’s a story that seems so bizarre that it might be good material for a Tom Wolfe re-do of The Bonfire of the Vanities rather than worth the time of a serious non-fiction reporter – except that it’s apparently true. According to this New York Times report last month, Egan-Jones, an “upstart credit ratings firm,” has been:

barred for 18 months from issuing certain government-recognized ratings after the firm made misstatements on an application with the government. The S.E.C. said the firm had exaggerated its record when it applied for a government designation in July 2008. The firm said then that it had performed 150 ratings of asset-backed securities and 50 ratings of governments, when it actually had performed none at that time, according to the agency…. Under the terms of the penalty, Egan-Jones is barred [for 18 months] from rating asset-backed and government securities issuers as a so-called nationally recognized statistical rating organization….For other categories of ratings, Egan-Jones will still have the government designation.

Huh? “Exaggerated” its record? A firm applying for the SEC seal of approval as a provider of honest securities ratings seems to have completely fabricated its resume, saying it had done 200 ratings when it had done zero. And the SEC puts them in the penalty box for just 18 months for some ratings and lets them keep right on providing other ratings?

There must be more to this story. Maybe the fabrications on the application were an accident, or the work of a prankster who snuck into the Egan-Jones offices and took over a keyboard. Or maybe the SEC announcement of the “settlement” was a prank. If not, can the SEC explain what an applicant would have to do to be barred permanently from winning a designation? And why did it take five years for the SEC to deal with this?

2. Is A-Rod’s contract as hollow as his bat?

The recent round of charges that faded Yankee star Alex Rodriguez may be implicated in another scandal involving performance enhancing drugs (PEDs) has generated press speculation that the Yankees will use the charges as a way of freeing them from A-Rod and the $114 million left to pay over the next five years on his contract. But according to this ESPN story, “Rodriguez might be in little danger of having his contract voided, even if the charges turn out to be true. There is no precedent to successfully void a contract in baseball over PEDs.”

The tax man who could change the 2012 campaign

Steven Brill
Jun 26, 2012 13:00 UTC

1. The IRS bureaucrat who could upend the campaign finance money flow:

Here’s an idea for a story about an obscure government bureaucrat whose decisions could have a major impact on the 2012 elections and on the entire issue of campaign finance reform going forward.

As this article in Roll Call, the Washington weekly, reports, there is increasing controversy surrounding super PAC-like groups that fashion themselves as coming under the Internal Revenue Service’s 501(c)(4) classification as a “social welfare organization.” Under IRS rules, 501(c)(4)’s are not only tax-exempt but also don’t have to disclose their donors. This means that they can spend unlimited sums on political advertising – including corporate contributions, following the Citizens United decision – but unlike super PACs, they can do so while keeping the sources of the money completely secret.

That’s why many of the big super PACS, such as Karl Rove’s American Crossroads – which are simply non-profits that engage fully and unabashedly in political activity but must disclose donors – operate companion 501(c)(4)’s that can take undisclosed donations. In the case of Rove’s super PAC,  the companion 501(c)(4) is called Crossroads GPS.

Old money, Yankee bunts, battling for veterans’ health insurance contracts

Steven Brill
Jun 5, 2012 13:31 UTC

1. Looking in on the old money:

This and other articles last week reporting that the Rothschilds and the Rockefellers are joining together to expand their wealth advisory and asset management enterprises reminds me of a story I’ve wanted to see for a long time: In an age when we’re entranced by the wealth of twentysomething dot-commers, someone should look at some of the old-name American fortunes and see how much wealth remains today for the dozens, or hundreds, of their descendants.

We know from this story and others that the Rockefellers still maintain an office that manages the family’s wealth (and, in fact, has expanded to manage other families’ fortunes). But how are they doing? What’s a teenage or twentysomething Rockefeller worth today? What about the Morgans, the Goulds, the Vanderbilts, the Astors, the Flaglers? Or the Kennedys? Who’s still doing well? Who’s down and out, and why?

2. Why no bunts?

Unless you’re a baseball fan, or maybe unless you’re a Yankee fan, you may not care about this, though you should, because it could be a story about ego overwhelming pragmatism. With baseball teams overshifting their defenses this year more than ever to snag hard grounders and line drives from lefty pull hitters, why aren’t any of the power lefties simply bunting down the third-base line for an almost sure single or maybe even a double? After all, the best hitters only succeed 3 times out of 10, while this is probably a 9-out-of-10 proposition.

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