This Latin phrase was brought to mind today as I read a piece in the Financial Times about Sir Allen Stanford and his alleged $8bn fraud scheme involving certificates of deposit in Antigua. The phrase is loosely translated as “who will guard the guards?” and is from a Roman poet by the name of Decimus Junius Juvenalis (c. 50 – c. 130). Plato used it for one of his dialogues in the Republic which addresses the problem of determining the ideal state. The phrase is profoundly relevant to our financial crisis thanks to the Securities and Exchange Commission (SEC). I told you they would be a frequent guest in these blogs, and they have yet to disappoint.
Following a routine examination, the SEC began a more formal probe of Stanford Financial Group and Stanford International Bank in October 2006. However, according to the Financial Times, the “SEC ‘stood down’ on its investigation at the request of another federal agency in the spring of 2008.” The SEC has declined to provide the name of the federal agency. As Congress begins weaving a new regulatory framework, it is essential that “unnamed” federal agencies be brought to light and held to account.
Remember Sir Walter Scott’s quote… “oh what a tangled web we weave when first we practice to deceive.”