Monday, May 5, 2014

Harvey Pitt is an Asshole

Assholes get little credit. They're always there in the darkness and heat, constantly, yet tirelessly flexing for all they're worth; one transient, relaxed moment away from total disaster. We take our anuses for granted, we even refer to unsavory folks we don't like as assholes. When I think about working at the SEC, FBI, DOJ or AG's office, I imagine it's probably a lot like being our asshole.

They work long hours filled with shit and hot air. The equipment only gets upgraded in case of emergencies. They have limited resources, but potentially unlimited demand. Although they have little input into what goes into the system, regardless of how much gets crammed in there we expect them to make ZERO mistakes. If they let down their guard for one minute the filth and muck could spill out anywhere.

It is in a spirit of respect and admiration that I make the analogy, particularly because they have to deal with shitstains like me. My sincere thanks to all of the assholes in the world (both figurative and literal) because my life would be a huge mess without you.

And as the bowels of Wall Street gurgle and churn, binging on information, acidifying and then extracting the nutrients out of every morsel of news and rumor, ever so tightly the sphincters hold the line. As the masticated compendium snakes its way through our system, those sphincters act as gatekeepers, ultimately responsible for the timing of that information's release. It is tiring, thankless work.

Like college frat boys clumsily attempting to explore the system in reverse order, we often attempt to probe those regulators in an effort to take their temperature, judging the digestive health of the systems they regulate. Anyone that has ever attempted to extract information out of a government regulator knows that 'tight' does not even begin to describe the inflexibility of their sphincteral fortitude. It's like trying to open a clam that's caught in a bear trap. So when the former head of the SEC ascends the throne and voluntarily puckers up I'm not so quick to flush.

Last week, when Chairman Pitt was asked by Trish Regan (embedded below) about the recently confirmed news that the SEC was investigating trading in Herbalife he said,

"They've been looking at HLF, I suppose in part, based on Ackman's allegations. These allegations actually redound to Ackman's disadvantage because they are about lack of trading principles at Ackman's hedge fund and that I think will have a serious consequence.

he continued...

Every hedge fund like Ackman's is required to have effective policies to prevent the disclosure of material nonpublic information. And so, if Ackman's employees are divulging information, that would be a violation, both of it's policies and of insider trading requirements.
Later on Chairman Pitt added:
It is very clear that Ackman's whole strategy has not been about imparting news to the public its been about creating trading opportunities for his short position. 

When asked by Ms. Regan if it would be in Ackman's interest in terms of making money to leak information about his short position Chairman Pitt responded:

Exactly, and one other thing is to encourage other funds to sell stock as well, even if not before the event, to try and put more pressure on Herbalife's stock price.

To put Chairman Pitt's comments into context, it was previously reported that Mr. Ackman was personally peddling material non-public information to others at an idea dinner in an effort to encourage them to short Herbalife. Forget Pershing Square employees, Ackman himself appears to have wiped his ass with any policies governing insider trading requirements and confidential information.

As much as Mr. Ackman has positioned his short interest by swaddling it in the false aura of a bleeding heart, it is increasingly clear his investment style is to become a bleeding, inflamed hemorrhoid attempting to throb forth with misinformation, pain and discomfort into the bowels of American investing. Harvey Pitt is no regular asshole either. He was THE asshole at the SEC and prior to that he worked directly with Congress to draft a plain language restructuring of insider trading rules. I wouldn't be surprised if we begin to see more assholes decide to drop off a couple friends in Bill's pool.


  1. I had an interesting email exchange with Bloomberg about Trish Reagan addressing Harvey Pitt as Mr. Chairman, and asked for a retraction. They considered the mistake not substantial enough for a retraction, but they will refrain from the practice in future, here is part of their response:
    I consulted a blog called Honor and Respect by Robert Hickey, acknowledged as an expert on such matters. He has written that, if an office can be held by only one person at a time, it is incorrect to use the title for a former official. Thus, it is Mr. Clinton, not President Clinton -- and not Chairman Pitt.
    In this particular case, I couldn't tell from the clip how Trish Regan introduced Mr. Pitt. In an interview of more than five minutes, however, she called him "Chairman" only once, at about 3:33. Had she referred to him repeatedly with the title, I would have felt, regardless of protocol, that it was conferring an exaggerated sense of authority on someone who hasn't held the office for more than a decade. For the most part, though, she just asked questions, with no prefaces and any potential damage seemed minor.
    I have passed along your message -- and the correct protocol -- to the head of Bloomberg TV programming in the United States. He assures me that he will make sure his staff knows about the correct form of address. I'm glad you wrote and hope this is helpful.

  2. Harvey Pitt resigned amid a flurry of scandal, including Enron, Worldcom, Global Crossing and the Webster appointment. The White House ran him out of DC on the eve of election, hoping no one would notice. Unfortunately, 10 years is about right for the memory to fade of how his SEC administration was asleep while shorts shouted from rooftops, while crooks run amok (like Herbalife is doing today) and he ignored it. He's still practicing the Beltway art of pontification and self-promotion. I would heavily discount anything he has to say under the banner of his being former Chairman of the SEC. it was hardly an esteemed tenure.