NYT: Einhorn's Book Required Reading

A recent two-page article in the New York Times says that "Fooling Some of the People" should be "required reading for Mary L. Shapiro, the new chairwoman of the S.E.C." We fully agree. Here is the introduction:

TWO events occurred last week that seem unrelated. But, as often occurs in our interwoven world, connecting the dots is revealing.

First was Linda Chatman Thomsen’s testimony last Tuesday before the Senate Banking Committee. Ms. Thomsen, the director of enforcement at the Securities and Exchange Commission, offered her take on how the nation’s top securities cop missed the Ponzi scheme Bernard Madoff is said to have run for decades, noting how aassiduously the S.E.C. chases tips it receives.

“Without fear or favor,” she said.

The next day, shares in Allied Capital, a business development company that invests in small to midsize concerns, plummeted almost 50 percent. Allied, whose stock was favored by small investors for its rich dividend, said it was trying to renegotiate its own loans amid the credit crisis. Dividend in danger, Allied’s stock closed at $1.56 on Friday; last September, the shares touched $16.

The two events are linked by this: Just as the S.E.C. failed Mr. Madoff’s investors as tipsters told the agency he might be up to no good, it also seems to have let down Allied’s shareholders by ignoring analyses of aggressive accounting at the company.

The article goes on to re-cap the book's theme and its main points. If you find the rest interesting, buy the book. It's good.