The Wall Street Journal has a superb Money & Investing profile this morning of an Alabama securities regulator who makes the feds look like pipsqueaks.
Jean Eaglesham’s lede is outstanding. How could you not want to read this story?
Joseph Borg has never mounted his Kawasaki motorcycle in pursuit of a fraud figure. But Alabama’s securities commissioner once sent investigators by armored personnel carrier to close down a Florida church.
The 59-year-old regulator’s strategy for cracking down on financial crime is as straightforward as his recipe for making deep-fried Thanksgiving turkey in 42 minutes: Punish wrongdoers with hefty prison sentences and big financial firms with much bigger fines.
And the headline is great, too:
In Alabama, Beware the Borg
As Stock-Regulation Power Shifts to States, Joseph Borg Boasts Tough Record
And it’s laced with color like this:
The securities regulator recalls with relish the case of “one guy who thought Maui was a foreign country. We got him back.”
The profile is pegged to a look at how state regulators will inherit new authority under the financial-reform law to regulate small investment advisers. And it points to Alabama as a model of what state securities regulation could be. This in particular is interesting:
The agency funds its operations from license fees and fines, contributing $12.5 million to the state in fiscal 2010 and ordering the repayment of slightly more than $1 million to alleged fraud victims.
The Journal doesn’t tell us if that funding arrangement is typical for state securities regulators, but it does tell us that Borg’s was one of the only offices to get its budget increased last year amidst the recession.
That may be the very best way to get a bureaucracy to push aggressively against white-collar criminals: Make its existence dependent on winning cases against them. There was a minor push last summer to make the SEC self-funding. That was knocked down by the usual suspects because it would make the weak-kneed agency more powerful.
Borg, naturally, has some choice words for the SEC and its chief’s former job at FINRA:
“You’ve got to have tougher sanctions for Wall Street,” he says in a barely veiled jab at the Securities and Exchange Commission and Financial Industry Regulatory Authority. Fines of just “several million dollars when a firm has made $100 million” leave the culprits “waving from their yachts on the Caribbean.”
I love this guy. Why isn’t he in Washington? (That was a rhetorical question. I’ve gotten more cynical the last three years).
Alas, the Journal never gets around to telling us what happened with the anecdote in the lede, where Borg sent the tank into Florida. That’s a miss.
My only other complaint is that it seems like there might have been an even bigger profile here.
It’s not always a good sign when a story leaves you wanting more. In this case, it is.
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.