Hiltzik Is Excellent on the CFTC Judges

The Los Angeles Times columnist digs into the case

Michael Hiltzik takes an excellent look at that awfully interesting Commodity Futures Trading Commission story where retiring judge George H. Painter says his colleague Bruce Levine promised Wendy Gramm (Phil’s wife) twenty years ago that he would never rule for an investor, and that a “review of his rulings will confirm that he fulfilled his vow.”

The plot thickened, as I wrote last week, when The Wall Street Journal published a Dow Jones Newswire story reporting that Painter’s wife says he’s got dementia and is trying to get guardianship over him in court. Painter, for his part, is divorcing his wife, and his son and niece say his wife is wrong.

Talk about a nightmare: You try to divorce your wife and she gets a court to give her power of guardianship over you? Sounds like Metallica needs to update “One”:

But I digress.

Hiltzik shows how that whole column-writing thing is done. He’s been around the block a time or two in this business journalism stuff and has dealt with Painter before, so he can write a lede like this:

Cards on the table: When George H. Painter says the game is rigged against the small investor in Washington, I have reason to take him at his word.

And he rang up Painter and reports back on the judge’s mental state:

When I reached Painter again last week, he didn’t seemed to have changed much. “It’s gone to hell,” he said, referring to the standing of the investor at the CFTC. “But it’s always been that way, hasn’t it? We’re not prosecuting the bad guys.” For the record: He sounded perfectly lucid.

Which is very helpful for us readers trying to figure out whether there’s a real story here and whether this guy’s playing with a full deck.

Further, Hiltzik looks into the record to see if Painter’s accusations stand up. We already know about the Wall Street Journal story from ten years ago on Judge Levine—the one headlined “In Eight Years at the CFTC, Levine Has Never Ruled In Favor of an Investor.” But maybe Levine reformed his ways after getting nailed by the old Journal.

It sure doesn’t look like it, Hiltzik says:

I did a cursory search of both judges’ rulings in reparations cases, in which investors seek to recoup losses due to alleged fraud, going back to 2007.

In that period, Painter found for investors at least five times, and Levine once (in that case he cut the investor’s $114,000 claim to $52,000)…

It would be hard for the commission to claim it has been unaware of serious issues with Levine’s work. My search found three cases in which it overturned dismissals by Levine, sometimes with harsh words for his performance.

That advances the ball quite a bit here. Good for Hiltzik for doing so—nobody else has bothered to touch the story since the Journal’s poor effort a week ago.

First of all, the Journal needs to revisit this story to correct the record on its one-sided report, which, as it stands, looks like a hit piece on Painter.

Second, the business press as a whole needs to tell us a lot more about what’s going on at the CFTC and with Judge Levine.

Hiltzik’s column is an excellent start.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.