valukas says the s.e.c. ehman was being less than truthful when it said it had enough assets to survive the crisis. but that and other damaging information was never disclosed to investors, who continued to pump billions of dollars into the firm. should it have been disclosed? >> valukas: absolutely. >> kroft: isn't the government, the s.e.c. in this case, the... the people who were supposed to protect the investors? >> valukas: yes. >> kroft: aren't they charged with informing investors? >> valukas: yes. >> kroft: why didn't they do it? >> valukas: they may not have had the expertise necessary to understand the material they were receiving. they were getting the material. whether they understood it is another question. >> kroft: the very fact that government regulators were inside the company with access to its books and records would complicate any prosecution of lehman officials. until seven months ago, david kotz was the s.e.c.'s inspector general. over the previous four years, he issued more than 100 rep

the s.e.c.'s proposal starts the process of lifting the restriction, giving hedge funds the ability to brand themselves, and disclose more details to the public. >> i think it will actually make the industry much more competitive, differentiated, and better. you will see better players and stronger players coming out from the jobs act, and it will also help create jobs. >> reporter: adam guren is with a small firm called hunting hill global capital. like many in the field, the firm's website doesn't offer many details about its investment strategy and philosophy. if the new rule is finalized, guren wants to share more information with the general public. but hedge fund investments aren't for everyone, they come with unique risks and are limited to accredited investors. that means households with a net worth of more than $1 million, excluding their home, or two years of income exceeding $200,000, or $300,000 for couples. the rule poses challenges, and opportunities, for advertisers, because they'd

the s.e.c. standing on top of them. but the industry as a whole not just knight has got to get together with the little bit -- with tighter standards. the question is how do you get there from a to b right now. >> bob, look forward to hearing from joyce later on this morning. when we come back how do you place best buy after the news that the company's founder wants to buy it. we'll find out what the analysts are saying about the stock and if now is the time to get in. take a look at futures. dow is only 183 points from the high for the year. friday's gains the third best percentage gain the year as well. a lot more "squawk on the street" live from post-9:00 in just a minute. plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. our teams have the information you want when you need it. it's another reason more investors are saying... [ all ] i'm with scottrad

he'll join us live, the s.e.c.'s chief of asset management enforcement bruce karpati on post nine in just a moment.

the lawyers at the s.e.c. call out when they do something wrong. no they work for goldman soon. they don't do anything. it's the other way. if you are going to be a regulator, you are never going to -- >> but they are already a goldman sachs alumni. the former head of the s.e.c., mary schapiro resigned from the s.e.c. she came from goldman sachs. how is she going to possibly regulate on what she left an likely going back to? >> bob: you put your finger on it. senator levin and tom coburn, enough evidence up there -- prima fascia evidence they broke the law. for some reason the justice department doesn't want to do it. why? you are exactly right. the securities and exchange commission are loaded with goldman people or want to be goldman people. >> eric: if they nail goldman or morgan stanley or ubs they know that job is not going to be -- >> bob: is there any way we can bust the guys? >> eric: change the rules. change the rule. if you are a regulator, you can't go to work for the banks. vice versa. >> bob: can w

it's up to the s.e.c. ow to come in with regulations to carry out the intent of our law and help us move forward so that the resource wealth of countries in the developing world become a real asset, a real benefit as they develop sustainable economies and good governance, which helps global stability and helps the global economy. we'll be watching the s.e.c. i know we'll be in recess during that period of time, but we'll be watching the s.e.c., and i hope that we'll be working together and the united states will continue to exercise its leadership and we'll see other countries follow suit where we really can make a difference in the wealth and growth of countries around the world that for too long have been suffering even though they have a lot of mineral wealth. and with that, mr. president, i would suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call: quorum call: a senator: mr. president? the presiding officer: the senator from alaska. ms. murkowski: request p

the s.e.c. companies mundane questions about the quarterly and annual filings and show up on the website under something called correspond and upload. a recent exchange of herbalive and the s.e.c. hardly appears to be routine. they zeroed in on one of the same questions of disclosure that is hedge fund manager ihorn did on the company's earnings call. notably, the agency wanted to know why the company stopped breaking out details of sales to different types of distributors and why the company doesn't give disclosure about something called the 70% rule which gets to the heart of the controversial issue about how the herbalife products are sold to end customers. herbalife told the s.e.c. it doesn't believe it's relevant. they told me it's closed and no investigation. but as i write on cnbc.com, with the s.e.c. asking the same questions as einhorn, maybe investors should, too. >> i'm sure they'll be doing reading themselves, digging themselves. >>> will ron johnson see the jcpenney turnaround throug

those questions were asked by the s.e.c. i think the right questions are being asked. what i would like to see is the federal reserve start to audit the full plans and actually make sure that people have the thoughtful process in terms behalf they're acceptable as collateral and are they actually looking at it. we can rely on banks to do that. we don't feel it's appropriate, and we are very thoughtful in terms of the process we go through, and we determine what are acceptable forms of collateral, even down to specific levels with various counterparties. >> but there still exists the possibility that either wittingly or unwittingly a mutual fund could have the collateral in that transaction that the dealer put up as something that would be very difficult for them to liquidate if that became their only mechanism to pay back. >> that is a real risk, senator, yes. >> and let me ask the final question. there's an alternate, at least one other alternate mode to this market, and that is to designate, rather than having clearing banks, to have what would be known as a financia

puts in to you know compares forty three million dollars in two thousand and ten in fines by finra the s.e.c. one billion five so you see what that cover of austerity is causing even further of a spiral of deflationary collapse absolutely they're playing with fire the present revolt is coming and the guys on t.v. with the long blonde hair like bar killed. diamond for your bar. server thank so much for being on the cause report thank you max don't go away much more coming your way. see good leverage or kirby was able to build the world's most sophisticated robot which on fortunately doesn't give a darn about anything tunes mission to teach creation why it should care about humans. this is why you should care what you're only on the r.-g. dot com. mission. critical three scorch jews three. great humans three. three stooges. three broken videos for your media project a free media oh don carty dot com. welcome back to the kaiser report imax kaiser time not to go to spain to talk with paul moore he's the former head of regulatory risk at halifax bank of scotland otherwise known as h. boss before

he'll join us live, the s.e.c.'anagement enforcement bruce karpati on post nine in just a moment. it's something you're born with. and inspires the things you choose to do. you do what you do... because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream. to create. to work. if you're going to do something. make it matter. and i'm here to tell homeowners that are 62 and older about a great way to live a better retirement. it's called a reverse mortgage. [ male announcer ] call right now to receive your free dvd and booklet with no obligation. it answers questions like how a reverse mortgage works, how much you qualify for, the ways to receive your money, and more. plus, when you call now, you'll get this magnifier with l.e.d. light absolutely free. when you call the experts at one reverse mortgage today, you'll learn the benefits of a government-insured reverse mortgage. it will eliminate your monthly mortgage payments and give

puts in to you know compares forty three million dollars in two thousand and ten in fines by finra the s.e.c. one billion and so you see what that cover of austerity is causing even further of a spiral of deflationary collapse literally they're playing with fire the present revolt is coming the guys on t.v. with the long blond hair like bar killed. the man for your book. i say sir thank so much being on the cars report thank you max don't go away much more coming your way. one. hundred on the phone with your. forty acres and nineteen ninety three and decided it would be a great place to find the belle the home and retire. there she is. we call it our new neighbor neighbor seven. we have seventy acres here and i can convince them that they need to drill somewhere besides two hundred feet from our house. meeting the needs of a growing economy also means expanding our domestic production of oil and natural gas which are vital fuel for transportation electricity and manufacturing this is for problems with the full weight of the rifle and then. you know our flaws are not toxic and we did a lot of

in mid-2007 the s.e.c. ges that he began putting all the powerful connections to use in an elaborate ponzi scheme with another business partner. >> there was approximately 100 investors invested approximately $80 million. there was a group of football players and coaches and things like that. >> the college hall of famers role was to woo his high-profile friends and colleagues to invest their high-profile salaries. the s.e.c. complaint says that he used his influence as a trusted coach to bring in former players, saying things like your daddy is going to take care of you and if you weren't my son, i wouldn't be doing this for you. former kansas city chief ken dral bell who played for donin at the university of georgia tells that he sunk and lost $2 million into the fund. but the targets went beyond the players. he was also able to convince some of the country's top coaches to invest by promising juicy returns. former dallas cowboys coach barry switzer, virginia tech's frank beamer and texas state's dennis fr

puts in to you know compares forty three million dollars in two thousand and ten in fines by finra the s.e.c. one billion and five so you see what that cover of austerity is causing even further of a spiral of deflationary collapse literally they're playing with fire the present revolt is coming the guys on t.v. with the long blond hair like bark children. come in for your book or. news server thank so much being on the cars report thank you max don't go away much more coming your way. stop and look at the current a bit it's unemployment the national debt failing governments ask yourself does it really matter who wins with billions created daily you can gamble with your money or turn it into solid gold request the gold and silver investors guy. call today eight hundred two five seven gold. welcome back to the kaiser report imax cons are time now to go to spain to talk with paul moore he's the former head of regulatory risk at halifax bank of scotland otherwise known as h. boss before i became a whistleblower paul is put himself forward to serve as interim chairman of barclays bank and while

just because it reworked the settlement package doesn't mean the s.e.c. approval is a shoe in at this point. now that the banks involved in the facebook deal are being asked to provide commentary, a harsh light is being shown on nasdaq and its role during and after the botched ipo yet again. of the vocal victims, ubs lost the most, roughly $365 million down the drain due to a mistake in facebook position that couldn't be exited. ubs in a letter today calls nasdaq 62 million compensation plan, quote, inadequate considering the exchanges, quote, unprecedented failure. citigroup that lost roughly $20 million says the plan is, quote, insufficient and nasdaq wasn't prepared for the ipo. securities regulators cifma weighed in saying it was acting as a for profit market participant and doesn't deserve regulatory immunity also writing that allowing the nasdaq plan to go through would raise significant policy issues. brian, it is $62 million, the amount nasdaq is offering, is dwarfed by the amount that brokers say they lost which is roughly $500 million in total. n

i was heartened by the s.e.c.'s move. the s.e.c. has done some good things to try to restore discipline to the market. hasn't done enough yet. there's more to do. >> okay. it's great to have you joining us on set today. we look forward to having you back. >> thank you. >> more evidence today that the machines are winning the battle against men on the street. according to the "wall street journal" morgan stanley replaced bond traders with computers aztec noas technology takes over, it is possible to build the machines. let's welcome back irene aldridge of able alpha trading. what should we think about this story, that now morgan stanley is replacing some bond traders with computers and humans are losing out yet again. >> i think it's a fantastic thing, and it's a fantastic thing for many people. first of all, morgan stanley shareholders. think about the traditional bond trading floors. these people sit there and take coffee breaks and get ill. they still have to be paid. they still have to be paid. they're paid bonuses, and now they'

oracle is paying $2 million to settle charges with the s.e.c. olated the foreign corrupt practices act because a subsidiary in india kept money off the books and used it to make unauthorized payments to phony vendor. a former morgan stanley vice president has been sentenced to jail time for violating the same act. he says the law is politically motivated and is a sham. cnbc's own scott cohen joins us now with the details. good evening. >> reporter: good evening. garth peterson doesn't say it's politically motivated but he has problems with the way the law is being enforced. the feds made a big deal about the case when peterson pleaded guilty as a show of force how serious they are about enforcing the foreign corrupt practices act. peterson could have faced five years in prison for brokering a deal that made a chinese government official richer on paper. instead he got nine months in prison when he was sentenced today. he's speaking to us and says that the way this case was handled doesn't get to the heart of the problem when out comes to foreign

goldman settled a separate case with the s.e.c. last summer, paying $550 million to put to bed charges it defrauded investors. again, it was about subprime mortgage securities, and this was back in 2010. it happened to be the biggest penalty a wall street company has ever paid to the s.e.c. deb? >> alison, i think i read somewhere that a goldman spokesperson was quoted as saying they are happy they can put this behind them. but can they face potential future charges? >> yeah. i mean, the firm is safer now. but it's not completely out of the woods. the justice department does say that if any additional or new evidence comes out, it certainly doesn't prevent the department from making a different determination. deb? >> all right. alison kosik for us at the stock exchange. we'll come back to you a little later on. >>> well, curiosity has only been on mars a few days, and it's already getting an upgrade. nasa planning to update the rover's software, which will take about four days. meanwhile, we're getting a new look at the surface of t

>> the figures come out of the company's 10k filings with the s.e.c. and the best information of the taxes paid last year. with abbott we struck a nerve. we draw attention to the fact this is a company of 64 tax -- subsidiaries in tax haich countries. also that they reported making more than 40% of their sales in the u.s. last year but strangely reported only about 7% of their profits from this country. and so, they are focusing in on our tax number accusing us of being misleading. i'd love to see documentation of that. and also, response to the issues around why does this company have 64 subsidiaries in tax havens? with the other companies, they are trying to on vi skate saying we didn't look at the foreign taxes they paid or the state taxes. we are looking at federal corporate income taxes and looking at the cash that changed hands last yore. >> yeah. >> with deferred taxes, often those taxes will never be paid. if it's, for example, on offshore earnings, taxes don't have to be paid unless that comes back to the u.s. and that might not ever happen. >>

the s.e.c. has the right focus.hey're going to bring the industry together in september and say let's not use this as an excuse to not advance but focus on concrete steps we can take now to protect investors. i'm very enthusiastic about that. >> you have high frequency traders. the knock is they're doing more harm to the individual investor, perceptionwi perceptionwise, that's the case, than help. you disagree with that? >> i do disagree. one, i don't even know what high frequency trading means because technology is a key part of trading. if you think about things that have inveers concern, recent issues, facebook, the reason ipo problems, it has nothing to do with high frequency trading. it's about better managing the risks that's coming along. >> let's open it up to the traders. joe? >> do you think the conversation begins with the exchanges themselves? they' clearly there's an economic incentive to trade more frequently. >> i think there's an economic incentive for everybody to have confidence in the stock market

and don't miss the s.e.c. showdown. >>> it's time for the world's biggest tomato battle, that takes place each year in a small spanish town. >> 30,000 tourists pelted each other with tons of tomatoes. portable showers are set up to wash off the mess afterwards. the town's streets and walls are hosed down after that battle ends. >> never a shortage of tomatoes. >>> coming up next in "the pulse," something distinctly knnew coming to "the price is right." >>> and the proposal that no one could say no to. we'll be right back. (bell rings) hi. good morning. big news. we're spreading the word about new honey bunches of oats fruit blends and their unique taste combinations. like peach/raspberry... and banana/blueberry. we're telling everyone. with one flavor in the granola bunch and one on the flake. try some. mmm! two flavors. in harmony. yummy. four nutritious grains and two big fruit flavors to make your day bunches better. and also to build my career. so i'm not about to always let my frequent bladder urges, or th

chester spat, investor at the temer scoop of business and former chief economist at the s.e.c. it's a benefit. irene aldridge, her firm builds high-frequency trading systems for clients and broker dealers and our own john najarian who actively trades the markets daily and tracks the distortions that high-frequency trading has caused. other traders on the panel free to enter the discussion as they see fit. doug cass, i'll start with you. the blow to investor confidence is what as you sit there trying to manage money? >> i say kill the technology before they kill us. in life and in the markets, the subject today, it's like the billy joel song "it's only a matter of trust." and i think one of the unintended consequences of technological innovation, innovation which is done a lot of time under the not so watchful eye of the s.e.c., and regulatory authorities, is really disruptive to the marketplace. and giving investors both retail and institutional pause with regard to re-entering the markets -- >> mr. spat you've made the argument that high-frequency trading, electric trading in

the s.e.c. will convene a roundtable meeting in the coming weeks. for it's part, knight worked to regain investor and customer confidence. it's share price continued to see big price swings, gaining 58% on very heavy volume today. knight has to have a certain amount of money available to it in order to do what it does, match buyers and sellers in the market. and the company reportedly arranged a short term line of credit today to stay in business. at least one big customer is returning. t.d. ameritrade today said it will resume routing trades to knight capital. the online brokerage was one of several customers that stopped doing business with knight after the company experienced troubles with a trading software update wednesday morning. >> tom: long before wednesday's trading glitch, trading volumes indicated retail investors have all but left wall street. all next week on "n.b.r.", we'll take a closer look at what's happened to investor confidence, and why glitches like the one that hit knight capital, have smaller investors running away from wall

much of that criticism headed in the direction of s.e.c. d something this important you needed time for the public to comment. back to you guys. >> hampton, thanks so much. hampton pearson in washington. when we come back, we'll sit down with a gulf coast shrimper battening dow jones the hatches. what precautions is he taking and what is his plan after the damage is assessed. we'll get your small business take on isaac when we come right back. tdd#: 1-800-345-2550 when i'm trading, i'm so into it, tdd#: 1-800-345-2550 hours can go by before i realize tdd#: 1-800-345-2550 that i haven't even looked away from my screen. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 that kind of focus... tdd#: 1-800-345-2550 that's what i have when i trade. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 ...helps me keep an eye on what's really important to me. tdd#: 1-800-345-2550 it's packed with tools that help me work my strategies, tdd#: 1-800-345-2550 spot patterns and find opport

. >> the s.e.c. will be having its first meeting of the 2012-2013 skl year on monday, august 20.he meeting will be here at 555 franklin and will run from 5:30-7:00 p.m. >> and i want to report that the s.a.c. will be collaborating with the youth commission from august 25- august 26 at city hall and is a two-day retreat where we'll discuss government structure and school district structure and get familiar with each other, so i think it's important for the youth commission and the s.a.c. to have a close relationship. that's it. president yee: good report. let's move on to item e, parent advisory council. the p.a.c. report. there's no p.a.c. report tonight. and their next report will be given at our next board meeting. so item f, public comment and consent items. >> commissioner yee? president yee: yes. >> we have a proposal that we change the rules of the board so that the p.a.c. report would be given once a month instead of every meeting so we're going to defer that to the rules committee and will be bringing a proposal. so in the meantime we'll operate that way. so they're plann

no, it's not, i think it falls back to the s.e.c. and the s.e.c. really their regulation of the industry itself. specific to knight capital for a second, a name that i've mentioned in the past as a name that you want to own. it has not performed over the last six months, so i haven't spoken about it since then. but i will surprise you with this one. i think you'll see the analysts based on the price decline and come out on a valuation basis and say you want to own it. >> steve, does the system work here? should investors feel confident about what they're seeing today, amid questions of another example of how they shouldn't trust the markets? they had human beings down there, right? they did the right thing it appears at least at this point. we don't know exactly what caused the problem and we're trying to investigate that as much as anybody else. but did the system work today or not? >> no, the system did work, because it stopped for a major panic. you saw an opportunity for some people, investing in one fund. the fund manager told me he came out a

. >> reporter: while the s.e.c. took a tough line with knight capital, there are growing concerns about the ability of regulators to police the street. >> regulators and regulation generally can't keep up with what's going on in the markets. it's just that simple. now one of the main reasons for that is that there is a fairly massive effort led by wall street and its allies to defund the agencies so they can prevent them from putting financial reform into place. >> reporter: before the computer mistake, knight handled 20% of the trading in shares like apple. it was a well-respected and innovative firm and all that blew up in just half an hour. darren gersh, "n.b.r.," washington. "nightly business report" >> continuing to reshape the investment market. >> join the discussion online at facebook and twitter. how confident are you in the technology that powers the market? will it change how you trade and invest because of the technology. join us online. >> on wall street, investors. helped the major averages to fresh thr