The SEC's OIG and Einhorn

Someone at the Office of the Inspector General (OIG) at the Securities and Exchange Commission has evidently read David Einhorn's book, FOOLING SOME OF THE PEOPLE ALL OF THE TIME.

For the OIG has sent its semiannual report to Congress and it says it "has a pending investigation into an allegation made in a recently-published book that a former SEC attorney may have taken confidential investigative materials with him when he left the Commission and provided those materials to a company he went to work for as a lobbyist."

The reference is apparently to Mark Braswell, a lawyer for the SEC who left that agency in September 2003 to join the Venable law firm.

Thirteen months later than that (according to the Einhorn book, p. 258) Braswell registered as a lobbyist for Allied Cpital. Einhorn had been publicly very critical of Allied's accounting practice since May 2002. Indeed, that criticism, the range of reactions thereto, and Einhorn's reactions to those reactions, constitute the plot of his book, which was published by Wiley in June 2008.

So it naturally caught Einhorn's attention that Braswell, who had questioned him in the manner of the "bad cop" in a "good/bad cop" interrogation, about the May 2002 speech and about his relationships with other fund managers, turned up as a lobbyist for Allied.

Indeed, exclusively for Allied. "Braswell was not generally a lobbyist [for Venable]. Indeed, we couldn't find a record of any other lobbying clients."

Then Einhorn asks the question that the OIG is presumably now asking itself: "How could it be proper, or even legal, for a lawyer who obtained confidential material from us, including e-mails, trading records and testimony about Allied, to leave the government and go work for Allied while our dispute was ongoing?"

Mr. Braswell has said that he has made no inappropriate disclosures to Allied about SEC cases and that he's followed all ethics rules.

I have no reason to disbelieve him. But it does seem to me a good example of the reason why agencies have inspector generals. It isn't just a Danny Kaye movie.