Issa's letter to SEC's Schapiro on timing of Goldman Suit

Republicans are demanding answers to the timing of the Goldman civil suit, especially given that it was along strict party lines. 

Here is the full letter via Daily Caller:

April 20, 2010

The Honorable Mary Schapiro
U.S. Securities and Exchange Commission
100 F Street Northeast
Washington, D.C. 20549

Dear Chairman Schapiro:

The timing of the Securities and Exchange Commission’s (the “Commission”) filing of a civil securities fraud action against Goldman Sachs & Co. (“Goldman”)[1] has created serious questions about the Commission’s independence and impartiality. The Goldman litigation – filed by the Commission on Friday, April 16, 2010 – has been widely cited by Democrats in support of the financial regulatory legislation currently before the United States Senate. We are writing to request that you provide documents and information to this Committee regarding any sort of prearrangement, coordination, direction from, or advance notice provided by the Commission to the Administration or Congressional Democrats regarding last Friday’s filing against Goldman. The American people have a right to know whether the Commission, or any of its officers or employees, may have violated federal law by using the resources of an independent regulatory agency to promote a partisan political agenda.

The Commission’s canons of ethics require its members to “reject any effort by representatives of the executive or legislative branches of the government to affect their independent determination of any matter being considered by the Commission.”[2] Moreover, the Commission is prohibited from using its resources to influence the passage of legislation.[3]

Nevertheless, the events of the past five days have fueled legitimate suspicion on the part of the American people that the Commission has attempted to assist the White House, the Democratic Party, and Congressional Democrats by timing the suit to coincide with the Senate’s consideration of financial regulatory legislation, or by providing Democrats with advance notice. In fact, the aggressive campaign by Democrats in support of the legislation neatly coincided with the Commission’s announcement of the suit. For example:

· The Commission approved the Goldman suit in a vote that spit along party lines – a rare occurrence for approvals of enforcement litigation.[4]

· Before the Commission had released its announcement, the New York Times published on its website a story describing the suit.[5]

· Less than half an hour after the Times story’s publication, Organizing for America, the successor organization to Obama for America and now a project of the Democratic National Committee (“DNC”), sent millions of supporters an e-mail message from President Obama urging support for “Wall Street Reform.”[6]

· Within hours, the Democratic National Committee had purchased AdWords advertising from Google, Inc. The DNC’s Google campaign fundraising advertisement, headed “Fight Wall Street Greed,” appeared whenever a user ran a Google search for the phrase “Goldman Sachs SEC.” It read, “Help Pres. Obama Reform Wall Street and Create Jobs. Families First!” and included a link to, the website of Organizing for America.[7]

· Democrats in Congress and the Administration have heralded the Commission’s suit against Goldman as a welcome boost to their case for the legislation.[8]

· Members of the media have already begun to question the timing of the Commission’s suit and the actions of the Democratic National Committee.[9]

As supported by the Commission’s canons of ethics, and as frequently reiterated by you and other Commissioners, the unqualified independence of financial regulators is crucial to the health of the financial system and the U.S. economy.[10] For this reason, doubts about whether the Commission has scrupulously guarded its independence from the Administration’s partisan political agenda and concerted efforts to manipulate Congressional action are very serious, and should be addressed with full transparency.

The Committee on Oversight and Government Reform is the principal oversight committee in the House of Representatives and has broad oversight jurisdiction as set forth in House Rule X. In light of the circumstances described above, and the need for the Commission to avoid even the appearance of bias,[11] please provide the following records and information as soon as possible, but in no case later than 5 pm EST on Tuesday, April 27, 2010:

State whether any Commissioner or Commission employee communicated regarding the Commission’s suit against Goldman, prior to the public announcement of the suit on April 16, 2010, with any of the following:

Any employee of the Executive Office of the President;

Any employee of the Democratic National Committee or Organizing for America;

Any employee of the Democratic Senate Campaign Committee;

Any employee of the Democratic Congressional Campaign Committee; or

Any Member of the Senate or the House of Representatives, or any employee of the Senate or the House of Representatives.

Identify every person who sent or received any communication described in request no. 1.

Identify all known communications by any Commission employee or employees with The New York Times or other news outlets prior to the Commission’s public announcement of the suit. If you are unaware of any such communications, please certify as such and explain what steps the Commission has taken to identify any individual(s) who may have engaged in unauthorized disclosure of information.

State whether Commission Chief of Staff Didem Nisanci or Senior Adviser Kayla Gillan engaged in any communication with any individual in the subcategories listed in request no. 1 between March 1, 2010, and the present, and identify any other member of the Chairman’s staff who engaged in any such communication.

Provide all records and communications referring or relating to the communications described in requests nos. 1, 3, and 4.

For purposes of responding to this request, the terms “records,” “communications,” and “referring or relating” should be interpreted consistently with the attached Definitions of Terms.

In requesting records and information relating to the Commission’s suit against Goldman, We make no judgment regarding the suit’s legal merit. However, we are concerned that politics have unduly influenced the decision and timing of the Commission’s controversial enforcement action against Goldman.

The American people have a right to know whether the Commission, or any of its officers or employees, have attempted to use their positions to help President Obama and Congressional Democrats pursue their legislative agenda and seek victory in the 2010 Congressional elections. If, however, the appearance of coordination between the Commission’s Goldman suit and Democrats’ partisan activities is merely the result of coincidence and extraordinarily fast political reflexes, disclosure should offer the commission the best opportunity to address outstanding concerns. In either case, we look forward to your timely production of records and information in response to this letter. If you have any questions regarding this request, please contact Christopher Hixon with the Committee staff at (202) 225-5074.


Darrell Issa
Ranking Member

cc: The Honorable Edolphus Towns, Chairman


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