Brad Skolnik
Indiana Securities Commissioner
President, North American Securities Administrators Association

January 9, 2000
NASAA Winter Enforcement Conference
San Diego, California

GOOD AFTERNOON. I’M BRAD SKOLNIK, NASAA PRESIDENT AND INDIANA’S SECURITIES COMMISSIONER. IT’S MY PLEASURE TO INTRODUCE TODAY’S SPEAKER, JOHN MOSCOW, DEPUTY CHIEF OF THE INVESTIGATIVE DIVISION OF THE NEW YORK DISTRICT ATTORNEY’S OFFICE.

BEFORE JOHN SPEAKS, I’D LIKE TO SAY A FEW THINGS THAT WILL DOVETAIL WITH HIS REMARKS. IN ESSENSE, SOME THOUGHTS ON OUR ROLE AS SECURITIES REGULATORS AT THE BEGINNING OF THE 21ST CENTURY…. AS THE 20TH CENTURY BEGAN, THE STOCK MARKET WAS THE PROVINCE OF RICH MEN, LIKE J.P. MORGAN. AS THE CENTURY ENDED, HOWEVER, AMERICA HAD UNDERGONE A HISTORIC TRANSFORMATION. IN THE PAST GENERATION WE HAVE BECOME A NATION OF STOCKHOLDERS—HALF OF ALL HOUSEHOLDS ARE INVESTED IN THE STOCK MARKET.

THE HOUSE OF MORGAN HAS BECOME OUR HOUSE. WHAT DOES THIS MEAN FOR US, THE LOCAL COPS ON THE SECURITIES BEAT? WE’VE GOT AN INCREASED RESPONSIBILITY TO MAKE SURE THAT WALL STREET IS A SAFE STREET FOR MAIN STREET INVESTORS.

UNFORTUNATELY, AS YOU KNOW, WE’VE BEEN FIGHTING A BULL MARKET INSECURITIES FRAUD — FROM MICROCAP STOCKS, TO PROMISSORY NOTES TO INTERNET SCAMS. EDUCATION IS THE BEST CRIME PREVENTION TOOL BUT THE STRONGEST DETERRENT TO CRIME, I BELIEVE, IS CRIMINAL PROSECUTION AND PRISON TIME.

THE STATES BRING MORE CRIMINAL SECURITIES CASES THAN ALL OTHER REGULATORS COMBINED. WE AVERAGE ABOUT 300 CONVICTIONS A YEAR. BUT WE NEED TO BRING MORE, MANY MORE. WE ALL KNOW THE REASONS WHY SO MANY CASES END UP BEING HANDLED ADMINISTRATIVELY OR CIVILLY. THE CASES ARE COMPLEX, COSTLY, AND TIME-CONSUMING…

PROSECUTORS, JURIES AND THE MEDIA UNDERSTAND STREET CRIME LIKE THEFT AND MURDER. SOMEHOW SECURITIES FRAUD SEEMS SANITIZED, BLOODLESS, TECHNICAL.
BUT WE KNOW WHITE COLLAR CRIMES AREN’T VICTIMLESS CRIMES. JUST LIKE STREET CRIME, SECURITIES FRAUD RUINS LIVES, DESTROYS FAMILIES, STEALS HOPES AND KILLS DREAMS. WE ALL NEED TO MAKE THE EXTRA EFFORT TO BRING CRIMINAL CASES—TO RIGHT WRONGS AND ENSURE JUSTICE IS DONE BUT ALSO TO SEND A MESSAGE. TOO MANY CROOKS THINK THEY CAN GET AWAY WITH SECURITIES FRAUD AND FRANKLY TOO MANY GET OFF EASY.

SOMEONE STEALS YOUR CAR, THEY GO TO PRISON; SOME CON ARTIST STEALS THE MONEY YOUR PARENTS NEEDED FOR RETIREMENT, MAYBE THEY GET FINED. THAT’S NOT RIGHT.

HERE’S WHAT NASAA WILL DO TO HELP: FIRST, WE’RE DISTRIBUTING UPDATED MODEL JURY INSTRUCTIONS AND WILL POST THEM ON OUR WEB SITE. EDUCATING JURIES IS KEY TO GETTING CONVICTIONS IN SECURITIES FRAUD CASES. IN ADDITION, I WILL SEND THESE MODEL JURY INSTRUCTIONS TO PROSECUTING ATTORNEYS ASSOCIATIONS ACROSS THE COUNTRY AS WELL AS THE NATIONAL ASSOCIATION OF ATTORNEYS GENERAL.

NEXT, I PROPOSE THAT NASAA HOST A FORUM IN WASHINGTON DC LATER THIS YEAR, WHERE STATE, INDUSTRY AND FEDERAL SECURITIES REGULATORS, PROSECUTORS AND LAW ENFORCEMENT OFFICIALS CAN COME TOGETHER AND BRAINSTORM WAYS TO WORK TOGETHER BETTER WITH THE GOAL OF BRINGING MORE CRIMINAL PROSECUTIONS.

FINALLY, WE NEED A NEW MINDSET. AS JOHN MOSCOW WILL TELL US, WE HAVE TO STOP USING EUPHEMISMS WHEN WE TALK ABOUT WHITE COLLAR CRIME. WHITE COLLAR CRIMINALS ARE COLD, CALCULATING, AND VICIOUS. MANY ARE SERIAL VIOLATORS, CAREER CRIMINALS. IT’S TIME—NO, IT’S WAY PAST TIME—WE CALLED A CROOK A CROOK AND PUT MORE OF THEM IN JAIL. WE NEED PLAIN TALK AND TOUGH ACTION IF WE ’RE GOING TO PROTECT OUR FAMILIES, OUR FRIENDS, OUR
NEIGHBORS AND OUR FELLOW CITIZENS, WHO NOW LOOK TO FINANCIAL PRODUCTS TO SECURE THEIR FUTURES.

WHITE-COLLAR CRIME IS NOT ON THE NATIONAL AGENDA AND IT NEEDS TO BE. AS BILL MCDONALD, OUR COLLEAGUE FROM CALIFORNIA, SAYS, WE NEED TO PUT MORE “CONS IN THE CAN.” LET THIS BE OUR RESOLUTION FOR THE NEW YEAR, THE NEW DECADE NOW IT’S MY PLEASURE TO INTRODUCE JOHN MOSCOW.

January 9, 2000