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The Biggest Insider Trading Scandal Of The Decade Proves That Rich Guys Facing Jail Time Can Still Win a Break

July 5 (Bloomberg) — Rajat Gupta, the former McKinsey & Co. chief and pal of imprisoned inside trader Raj Rajaratnam, has one goal after being convicted last month of securities fraud: To convince federal Judge Jed Rakoff that he deserves minimal jail time.

There is a compelling public interest, after all, in keeping white-collar criminals on the street. The financial markets need liquidity, as any summer intern at a Washington lobbying firm can tell you, and we would be facing dark days if we lost our best talent at leaking confidential information. What good is a tipster in a place where high-frequency trading means swapping cigarettes for a batch of washed and folded laundry?

I don’t mean to suggest that his lawyers and throng of big- name business friends aren’t already doing a serviceable job of portraying Gupta as an honorable man who doesn’t belong in jail. Gupta’s lawyer, Gary P. Naftalis, pushed so hard to be allowed to tell the jurors about Gupta’s philanthropy that Rakoff had to offer a reminder: Even Mother Teresa would be judged on the evidence — but presumably not her saintliness — if charged with robbing a bank. And on the website, a collection of supporters cite everything from Gupta’s role as a founding board member of the Global Fund for AIDS, malaria and tuberculosis to his selfless offer to pay for a friend’s son to go to college.

The effort to tout his charity and good heart is a respectable start for the former Goldman Sachs Group Inc. director. But it doesn’t go far enough.

With the sentencing slated for Oct. 18, there’s no harm in maxing out on every possible pitch as to why the man found guilty of leaking confidential information to Rajaratnam should get a break. The community-service alternatives alone are boundless. A not-for-profit to wage war on bullying of school- bus monitors comes to mind.

Or maybe a faux-feminist foundation that cranks out op-ed articles on why it’s bad for women to receive equal pay to men.

Speaking of op-eds, it wouldn’t be the worst idea for him to get his worker bees cracking on a competition among news media outlets for first dibs on a Gupta byline. If Gupta’s lawyers balk, at least the public-relations people could ghostwrite a sermon on Gupta’s finer points, and hunt down a big name in business willing to put his or her name on it. You know, the types who are on important corporate boards and maybe even run global management-consulting firms.

White-collar defendants with bottomless checkbooks have been known to make colossal efforts to paint themselves as philanthropic pillars of the community. Sometimes that charity begins right around the time investigators deliver their first subpoena. Other times, as in the case of Gupta, magnanimity is a long-established practice.

You might wonder who would care if a rich person found guilty of a crime has sprinkled a few crumbs among the little people — and juries often wonder the same thing. Experts in selecting and analyzing juries say that jurors in mock trials and focus groups get turned off when there’s too much talk about a defendant’s good works. Philip K. Anthony, the director of jury consulting at DecisionQuest Inc. in Los Angeles, says jurors often mention that wealthy defendants derive benefits from their largess, including tax write-offs and goodwill from business associates and the community.

Paul Neale, the chief executive officer of Doar Litigation Consulting — the Lynbrook, New York-based firm that worked on the Gupta case — declined to comment on the trial. But he did say he has never seen philanthropy as a “definitive factor” in 23 years of mock trials that his firm has conducted.

Reality, though, can play out differently. Richard M. Scrushy, the former CEO of HealthSouth Corp., was acquitted by a jury in 2005 on charges he directed an accounting fraud. The Birmingham, Alabama, community got a heavy dose of his pious side even during the trial. Scrushy delivered a lecture and donated $5,000 to a church attended by one of the jurors. He and his wife hosted a Bible show that aired five days a week on local TV during the months before the trial began.

Even Rajaratnam benefited from hundreds of supportive letters to the court. Federal Judge Richard Holwell acknowledged Rajaratnam’s “very significant dedication to others” at sentencing, giving him 11 years even though sentencing guidelines called for as much as 24 1/2 years.

Maybe it wouldn’t hurt for Gupta to consider the example of Ronald Ferguson, the former CEO of General Reinsurance Corp. who faced a potential life sentence for helping American International Group Inc. deceive shareholders. Part of his pitch to the judge at sentencing was that he wanted to get back to his seminary education “and live my purpose to serve others.” Though his conviction was reversed on appeal and then settled in June in advance of a retrial, U.S. District Judge Christopher Droney sentenced him to only two years back in 2008. “We will never know why such a good man did such a bad thing,” Droney said. Ferguson’s supporters flooded the court with 379 letters.

A seminary stint may not be in Gupta’s future, but perhaps he could catch a break if he winds up filing an appeal and selects a new legal team with the magic touch.

In one of the most famous insider-trading cases of the late 1980s, Martin Siegel faced as much as 10 years in prison and a $260,000 fine. He had sold inside information in return for suitcases full of cash. Despite his crime, he spent only two months in prison, five years of probation, and received no fine.

It’s a pity that Gupta won’t have a shot at hiring the lawyer who shepherded Siegel to his propitious outcome. Siegel used Jed Rakoff, the guy who will decide what sentence suits Gupta’s crimes.

(Susan Antilla, who has written about Wall Street and business for three decades and is the author of “Tales From the Boom-Boom Room,” a book about sexual harassment at financial companies, is a Bloomberg View columnist. The opinions expressed are her own.)

Women Kill the Buzz for Guys Who Hire, Fire Them

June 7 (Bloomberg) — We’ve seen this movie before and the ending still stinks.

The sex-discrimination lawsuit by Ellen Pao against the Silicon Valley venture-capital firm Kleiner Perkins Caufield & Byers may be the gender and workplace story of the moment. But let’s get one thing straight: This doesn’t describe anything that’s new. It seems to happen routinely. Just yesterday, at a hearing in London, a lawyer for Latifa Bouabdillah, a former Deutsche Bank AG director, said the woman’s male colleagues were paid bonuses “double or triple that of the claimant” for the same work.

Swap out Pao for Pamela Martens, who led the class-action “Boom-Boom Room” lawsuit against Smith Barney in the 1990s, or Allison Schieffelin, who sued Morgan Stanley in 2001, or Carla Ingraham, who sued UBS AG in 2009, and you wind up with some combination of the same old complaints: coworker come-ons, power meetings for guys only, higher pay for men and retaliation against the uppity women who have the nerve to complain.

In the venture-capital world, where you get more than the usual share of people who are prone to thinking their every experience is novel, there is shock over news that a highly qualified woman has filed a suit against a celebrity firm. But sex discrimination isn’t the iPad, folks. It’s more like the electric typewriter.

Only a week before Pao filed her lawsuit on May 10, Jack Welch, the former General Electric Co. boss, told a gathering at a Dow Jones “Women in the Economy” conference that women who wanted to advance just needed to work harder. “Over-deliver,” he counseled — advice that would strike a lot of glass-ceiling casualties as exactly what they had been doing their entire careers.

I don’t know about you, but I got tired of this very predictable narrative about 20 years ago.

I have no idea if Pao’s allegations, filed last month in San Francisco Superior Court, are true. But they sure sound familiar. Pao alleges in her complaint that one male coworker gave her a book with sexual drawings and poems on Valentine’s Day and another cut her out of business meetings after she terminated a brief relationship with him. In her 2007 performance review, she was labeled “the top performer of the junior partners,” according to the suit. After that, Pao says she complained about discrimination. Then things changed, with two subsequent reviews citing her “issues and clashes” with other partners, the lawsuit says.

Pao’s San Francisco lawyer, Alan B. Exelrod, declined to comment. Kleiner Perkins said in an e-mail that the suit “is without merit” and will vigorously defend itself. Kleiner general partner John Doerr, whose name is frequently decorated with the phrase “legendary venture capitalist,” said in a statement posted on the firm’s website May 30 that it all amounted to “false allegations” against his firm, which has “the most” women of any leading venture-capital firm.

Twelve of Kleiner’s 49 partners are women, and in the venture-capital business, that’s considered very, very good.

How is it that 20 years after Anita Hill broke the silence about gender discrimination and harassment at work, there are still companies that can take a bow for being gender-equality heroes when 75 percent of their leaders are men?

There are many excuses used to explain away the snail’s pace progress for women at work, but the two most popular go something like this: It takes time to get women in the pipeline with education and experience. Or — don’t you hate when this happens? — those ungrateful women get jobs only to bail out because they can’t take the stress, want more free time for Pilates or miss staying home with the kids.

Let’s take that last one first.

New York-based Catalyst Inc., which does research on women in business, started tracking the progress of 4,100 full-time Master of Business Administration graduates around the world in 2007, homing in on those it identified as “high-potential employees.” No matter how Catalyst sliced the data in its four reports on “high potentials” since 2009, men started with higher salaries — a pay gap of $4,600 in the first job out of school — and enjoyed larger increases each year.

To address the argument that women are dropping out of corporations because they want more personal time or less stress, Catalyst teased out just the men and women who aspired to be senior officers or chief executives of for-profit companies. They also compared only men and women who had no children to address the “mommy wants to be home with the kids” argument. In each case, men started out making more and advanced more quickly.

So much for the girls-can’t-handle-it argument. As for the pipeline argument, consider Pao. She had seven years of business experience, an electrical-engineering degree from Princeton University, and a law degree and MBA from Harvard by the time she landed at Kleiner in 2005. She’s had a lot of female company accumulating the right pedigrees for years, too.

Women earned only 10 percent of undergraduate business degrees back in 1971, receiving 10,460 degrees compared with 104,936 by men. By 1985, women had increased that number tenfold; in 2002, women received more degrees than men. That doesn’t sound like an empty pipeline to me.

It’s time to shift the focus from trying to “fix” women, to trying to understand the subtle forces in organizations that may be holding women back, Christine Silva, a senior director of research at Catalyst, told me in a telephone interview.

Good idea. But part of the issue isn’t subtle at all.

Some employers just don’t want to hire women. Period. The biggest eye-opener I’ve seen in academic research to support that idea was a study in 2000 that tracked 26 years of auditions and hiring statistics for symphony orchestras.

Orchestras had come under pressure in the late 1960s to hire musicians in an unbiased manner, and began to conduct “blind auditions” where judges couldn’t see the person trying out. They literally performed behind a screen. In the end, professors Claudia Goldin of Harvard University and Cecilia Rouse of Princeton University found that a woman’s chance of being hired increased by 25 percent when juries were clueless about a tryout’s gender.

We could benefit from a corporate version of that blind- audition idea. Until someone figures out how that would work, my guess is we will keep rolling through lawsuit cycles of predictable allegations and ugly revenge strategies. Comb through the reader comments at the end of articles about Pao, and you will see that she is already getting a blast of a tried- and-true “nuts or sluts” attack that deems women who sue as either crazy or a little loose.

Pao herself reveals in the lawsuit that after a peer badgered her, she had sex with him two or three times, which is enough for some of her critics to conclude that she has no case at all.

Her foes are also anxious to get the word out that her husband, hedge-fund manager Alphonse Fletcher Jr., is black, litigious and unconventional. Don’t be surprised to see reporters put more energy into investigating Fletcher than they do probing Pao’s allegations. Fletcher does indeed have what can only be described as an unusual biography. He has sued an employer for discrimination, has himself been sued for sexual harassment of two men and lived with a male partner in New York’s famous Dakota building (which he sued for racial bias) before marrying Pao. His spokesman, Stefan Friedman, said he would ask Fletcher for a comment, but he never got back to me.

Fletcher’s history is an open invitation for guilt-by- association coverage that already is distracting from his wife’s allegations. It has nothing to do, though, with an office culture where, as Pao describes it, women were barred from power dinners with important clients because their presence would “kill the buzz.”

Back in 1987, a Smith Barney office manager in Garden City, New York, sent out an invitation to “All Garden City Brokers” for a day of golf and dinner at his country club. When several of the women tried to RSVP, the message came back that women weren’t invited. Presumably they, too, would have killed the boys’ club buzz. For too many women at work, 25 years later, this bad workplace act is still in reruns.

(Susan Antilla, who has written about Wall Street and business for three decades and is the author of “Tales From the Boom-Boom Room,” a book about sexual harassment at financial companies, is a Bloomberg View columnist. The opinions expressed are her own.)

Ex-Con Man Says JOBS Law Makes Guys Like Him Rich

April 4 (Bloomberg) — Mark L. Morze knows a good investment opportunity when he sees one, but he hasn’t pursued his fortunes quite the way the rest of us have. Morze, 61, hung his hat for 4 1/2 years at federal prisons in Lompoc and Boron, California, after pleading guilty to two counts of fraud for cooking the books at the infamous carpet-cleaning company ZZZZ Best in the 1980s.

He says he’s baffled that President Barack Obama plans to sign a law tomorrow that amounts to an open invitation for fraud. “I wish legislators would consult with people like me before they write something like this,” he says, sounding dead serious about the offer. “I could tell them, ‘I know what your intent was with this wording, but we can get around it so easily, it cracks me up.”’

I’m sure the last thing U.S. lawmakers were looking for in their zealous bipartisan push for the Jumpstart Our Business Startups (JOBS) Act was the inconvenient feedback of a seasoned investment fraudster — albeit one who says he’s rehabilitated and now lectures on the techniques scammers use. Though the JOBS Act was packaged as a plan to streamline rules to help small companies crank out jobs, even its cheerleaders have come up with scant evidence the law will boost employment much, if at all. In an election year when pragmatic politicians are laboring to come off as allies of deep-pocketed business donors, the JOBS Act is a slapdash attempt at securities-law deregulation, plain and simple.

The new law has 22 pages of gems that include new ways for securities analysts to tout their firms’ public offerings, and cool opportunities to avoid rules that force companies to supply audited financial statements. In the end, though, the law that Morze tags as having “real potential for abuse” boils down to two features that don’t bode well for small investors: It lets a lot of companies reveal less about themselves when they sell stock, and, for the first time, it lets companies flog their shares on the Internet.

The Securities and Exchange Commission still has to figure out how the new JOBS rules will read, which just means the unsightly lobbying to diminish investor protection hasn’t yet ended.

There is a lot to dislike about the law, and we will all learn soon enough which ill-advised provisions in the JOBS Act have done the most harm to smaller investors. For the moment, though, the law’s approval of something called “crowdfunding” looks like the most toxic of all.

I wrote about crowdfunding this time last year, having noticed that celebrity Whoopi Goldberg had promoted the idea on her Facebook page, where she continued to plug crowdfunding as recently as last month. Crowdfunding is a way to raise money, as tech types put it, “from the crowd” on the Internet. It became popular when musicians and other artists began using it to solicit online donations for underwriting music tours and films.

Crowdfunding comes with some heart-warming benefits. Families have crowdfunded to raise money for a loved one’s expensive medical procedure, for example. But it was only a matter of time before sharp-eyed investment types spotted the benign Internet fund-raising technique as a way to sell shares to the public.

There was a hitch, though. They had to find a way around those irritating SEC rules that force you to slog through extensive registration requirements. Now that the hurdle has been removed by the JOBS Act, companies will be able to peddle as much as $1 million in shares a year that investors can access with a click on their shiny new iPad 3s.

Even before JOBS came along, we were at little risk of running out of financial scams to worry about. At the Federal Bureau of Investigation in Washington, Unit Chief for Financial Crimes Aaron Seres says investors continue to get fleeced by boiler-room operators who hype shares of microcap companies, and that’s without the viral fraud possibilities that Internet IPOs would add. His fear is that unsophisticated investors will be lured into online scams and learn too late, as Seres puts it, that “Lo and behold, there’s no business in the first place.”

It will take months for the SEC to get those new rules in place, but Morze figures that the sleaze set is already doing prep work to line up refuse to sell on the new crowdfunding sites, which are known as portals.

“My guess is they’re setting up dummy companies,” he says, speculating that crowdfunding will appeal to “small investors who are a little intimidated by bigger marketplaces.”

Investors with annual income or net worth of less than $100,000 will be allowed to invest as much as $2,000 a year in a company that offers shares via crowdfunding. People with net worth or income of more than $100,000 can invest as much as 10 percent of their annual income or net worth, up to $100,000.

From what I can tell, crowdfunding’s supporters mostly are well-meaning boosters of entrepreneurialism who simply don’t have much understanding of how a swindler’s mind works. They have suggested fraud-thwarting measures such as a self- regulatory organization to keep things honest, and there is nothing wrong with trying that, though SROs have been no cure for the fraud we already have in the markets.

Fans of the idea have also found solace that when an entrepreneur makes a claim online about his or her company, readers can signal that the assertion is sound by pushing the “like” button. Unexplained in all this is why we wouldn’t expect that some sleazy stock promoter couldn’t arrange for his cronies to be gathered in an Internet cafe pushing the same button over and over again on some worthless fraud.

The JOBS regulatory easing coincides with a soaring caseload for law enforcers. The FBI had a record 726 pending corporate-fraud investigations in the fiscal year ended Sept. 30. It had 1,800 pending commodities and securities-fraud investigations for the same period, also a record.

History suggests that when you strip away regulators’ authority, you set the stage for more fraud and a spike in the number of investors who want nothing to do with financial markets. After Congress passed the 1996 National Securities Markets Improvement Act — what’s with these titles that say the opposite of their intent? — state regulators shifted from stopping fraud before it happened to mopping up the mess after investors had been bilked. Joseph Borg, the securities commissioner in Alabama, says investors have suffered “billions of dollars of losses” since that law stripped state regulators of their ability to vet private deals known as Regulation D 506 offerings.

“We used to call them up and ask questions about this or that or the other thing, and we’d never hear from them again — they’d just go away,” says Borg, referring to the shady characters who tried to sell garbage under the Regulation D exemptions from full securities-law registration. Today, Borg and his colleagues in other states usually settle for filing enforcement actions against Reg D crooks after the money is gone. State regulators have brought 580 enforcement actions against violators of Reg D’s exemption over the past three years.

The JOBS Act similarly denies states any say over crowdfunding offerings, but does honor them with the booby prize of having the authority to bring fraud charges.

And who might be the victims in the wacky new world of securities crowdfunding? Maybe not who you think.

The quest for financial literacy among smaller investors is a laudable goal pursued by consumer advocates in recent years, but it turns out that knowing the basics doesn’t mean you have what it takes to ward off investment criminals. Anthony Pratkanis, a professor of psychology at the University of California in Santa Cruz, told me he worked on a project where researchers got their hands on real-life tapes of crooks pitching victims on the telephone.

Perhaps it isn’t a surprise that victims often had unusual stress in their lives – divorce, job loss, or other difficulties — that made them more vulnerable. The crooks would “tailor the investment advice to whatever was needed,” Pratkanis said.

But Pratkanis said he didn’t expect to discover this attribute in many of the investors who lost: they tended to score highest on a quiz of eight basic questions about investing, which signaled to the research team that financial literacy offered little protection. Equally surprising was that victims were more likely to be male, married, wealthy and educated.

John Lawlor, a Long Island, New York-based lawyer who has practiced securities law for 27 years, told me the target of choice for scamsters who peddle worthless private securities over the telephone is the same group that the hapless JOBS law says it is trying to help: small businesses.

“It’s always small-business owners, usually outside of major metropolitan areas,” he said. “That’s who is on the cold-calling lists.” Regulators figure the same bad operators who scam over the phone will be exploiting the new online opportunities, too.

Morze has a good idea, JOBS law or no JOBS law. When someone gets caught, make it hurt, he says. “Prison really helps deter white-collar guys,” he said. Let’s hope lawmakers and regulators hear that.

(Susan Antilla, who has written about Wall Street and business for three decades and is the author of “Tales From the Boom-Boom Room,” a book about sexual harassment at financial companies, is a Bloomberg View columnist. The opinions expressed are her own.)

Occupy Vigilantes Write New Volcker Rule Script

March 1 (Bloomberg) — It isn’t every day that a reporter gets to sit in on a high-stakes policy meeting in New York’s financial district, but that’s exactly what I did on a balmy evening in late February at 60 Wall Street, the U.S. headquarters of Deutsche Bank AG.

No, the bank didn’t lose its institutional marbles and give me clearance to scribble notes while its cognoscenti mapped out corporate strategy. The confab I dropped in on was taking place under potted palm trees in the bank’s ground-floor public atrium, and the participants were 13 members of Occupy the SEC, a spinoff group of the Occupy Wall Street movement. I can’t help but conclude that their plans for petitions, marches, op-eds and sit-down meetings with banking regulators will be inflicting Wall Street with a long, nasty attack of agita.

Occupy Wall Street and its working groups, including Occupy the SEC, were supposed to be dead, in case you missed the obituaries. Now the protesters are messing with detractors’ heads with the emergence of a media-savvy collection of legal, banking and activist members who come off as sane and authoritative. This is not the way the Occupy bashers’ “welfare-bum hippies” propaganda script was supposed to play out.

On Feb. 13, seven writers who described themselves as “concerned citizens, activists and financial professionals” filed a 325-page comment letter to financial regulators, outlining their concerns about loopholes in the “Let’s Try to Avoid the Next Financial Crisis” proposal known as the Volcker rule.

It was among the longest and most detailed of 16,000 letters sent to the Securities and Exchange Commission, the Federal Reserve Board, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency during the public-comment period.

We may call it a “public” comment period, but in the real world it is deep-pocketed business interests, not Mom and Pop, who usually have the juice to persuade officials to amend financial regulations. It’s no surprise that Wall Street has been working furiously to dilute the rule’s restrictions on how banks trade and what investments they can own, and the industry has a heap of comment letters on the Volcker rule to show for it.

This time, though, there is a noisy voice plugging for the little guy, and it carries weight that these rabble-rousers understand the banking industry from the inside.

Or, as Occupy the SEC member Alexis Goldstein — who has worked at Morgan Stanley, Merrill Lynch and Deutsche Bank — explained the group’s line-by-line analysis of the Volcker Rule to me: “We’d say ‘OK, I’m a bank, so how am I gonna get around this rule?’”

Even veteran activists who advocate regularly for the public were wowed. “They understood the nonsense in the proposed rule,” said Bartlett Naylor, financial policy counsel at Public Citizen’s Congress Watch. Public Citizen, which also wrote a Volcker comment letter, was “humbled” by the Occupy effort, Naylor said.

Along with Goldstein, 31, who quit her job as a business analyst in Deutsche Bank’s technology department in 2010, the founding members of Occupy the SEC include Akshat Tewary, a former Kaye Scholer LLP lawyer who today specializes in immigration law; Caitlin Kline, a former credit derivatives trader; and a mysterious guy who calls himself “George Bailey” and claims to have spent 30 years working at compliance and accounting jobs at financial firms.

Bailey was a no-show at the Feb. 21 meeting I attended, but the other six authors of the letter were seated around three silver cafe tables strewn with half-eaten deli dinners and a jumbo bag of Reese’s Pieces. Seven other Occupy the SEC participants were there, too, including a New York University professor, Michael Ralph, who had come to the meeting because he had been impressed by Goldstein’s performance in a recent interview on MSNBC.

The group, which Goldstein calls “the finance dorks of Occupy Wall Street,” divvied up the tasks related to a regulatory comment letter they will be sending to the U.S. Commodity Futures Trading Commission, then made their way down a typed agenda list to this item: “March on Sifma.”

“What is Sifma?” a new member asked, referring to the abbreviation for the Securities Industry and Financial Markets Association, a financial-industry trade group. Tewary, who was running the meeting, put it in language that a newcomer could understand: “If we are the rebels,” said Tewary, “they are Darth Vader.”

Sifma has predicted something close to financial Armageddon — I guess they mean the sequel — if the Volcker rule, as written, becomes law. And the trade group seems to be going out of its way to ignore the protesters, which says a lot about how official Wall Street feels about the Occupy movement: When the action in New York’s Zuccotti Park was headline news in November, Sifma held its annual conference in midtown Manhattan and devoted not a single item on its program to the public outcry against its members. Asked last week if Sifma would like to comment on Occupy the SEC or its letter about the Volcker rule, spokeswoman Katrina Cavalli declined.

That stance doesn’t surprise public-relations pros who say that engaging with anyone in the Occupy movement would recognize it as legitimate, which is the last thing Wall Street wants. “Financial institutions, as well as other big businesses, have been quite successful in recent years in solving their regulatory problems without engaging in an open dialogue with the public,” says Alexander V. Laskin, an assistant professor of public relations at Quinnipiac University in Hamden, Connecticut. “Instead of public relations, they rely on private relations,” such as lobbying, he says.

Keeping the public out of the dialogue may get harder for Wall Street as Occupy the SEC steps up its game. At their recent meeting, members volunteered to set up in-person meetings with financial regulators (they have already had a one-hour conference call with 11 SEC officials); launch a Facebook page; post a petition on to support their Volcker letter; and figure out the logistics of a protest march in Washington. The June 6 anniversary of the SEC’s founding is a possible date for the march.

They have left voicemail messages with luminaries including Paul Volcker, the former Federal Reserve chairman after whom the rule is named, and Charles Ferguson, director of the documentary “Inside Job,” hoping to get them acquainted with Occupy the SEC’s work. The members exploit every opportunity to schmooze: One wound up chatting with Eliot Spitzer (yes, that Eliot Spitzer) recently after noticing the former New York governor biding his time waiting to be called in a Manhattan jury pool. On March 20, the group has appointments to meet with SEC and FDIC officials.

Once Occupy the SEC’s Volcker rule lobbying is done in May, members will pick a topic for what they call “the next big step.”

The group has brains, energy and flattering media coverage. But of all the things Occupy the SEC has going for it, its biggest edge may come from something that isn’t of its own doing: the financial industry’s cluelessness about the level of public disgust with its flouting of rules and kingly pay. Jamie Dimon, the chief executive officer of JPMorgan Chase & Co., told Fox News on Jan. 24 that the bashing of all bankers as bad guys is “a form of discrimination that should be stopped.” New York magazine interviewed a Wall Street executive in its Jan. 16 issue who bellyached that Main Street doesn’t understand Wall Street’s problems: “Even getting cut from $1 million to $500,000, they still think you’re earning too much,” the banker said.

And then there is T. Timothy Ryan, Jr., CEO of Sifma, who in an interview with Bloomberg Radio on Feb. 15 was asked this question: Might the economy be better off if trading and commercial banking were separated, “given what banks did to the country during the bubble?” Ryan’s answer came dripping with condescension: “Your comments are, I would say, relatively over-the-top as to what happened here,” he told Bloomberg’s Michael McKee. Proprietary trading didn’t cause the 2008 crisis, Ryan said. “Actually, most of the problems were created by consumer loans, which were retail residential mortgages.”

If only we could do something about those out-of-control residential borrowers who are imperiling the world economy.

Wall Street could get lucky. A prolonged bull market is always a trigger for faded memories and public complacency. The best thing that could happen for the bankers who today are under attack would be a revival of ailing investment portfolios strong enough to inspire the public to start ringing their real-estate brokers again.

Short of that, people like Ryan and Dimon should pay attention to this: “We want to get the message out that anyone can do what we did,” says Goldstein, who wants ordinary Americans to be comfortable playing a part in rule-making. The more success Goldstein and her pals have in getting the word out on this democracy thing, the more Wall Street ought to worry about the finance dorks who munch on peanut-butter cups in the 60 Wall Street atrium.

(Susan Antilla, who has written about Wall Street and business for three decades and is the author of “Tales From the Boom-Boom Room,” a book about sexual harassment at financial companies, is a Bloomberg View columnist. The opinions expressed are her own.)