During Linda Thomsen's tenure as head of the enforcement division of the SEC, Harry Markopolis, a former investment officer with Rampart Investment Management in Boston, was writing a series of persuasive letters to the SEC informing them of the statistical impossibility of Bernie Madoff’s investment returns.  Despite being intimidated by the SEC's connections to Madoff, he persisted with letters and meetings.  But to no avail:

"My experiences with other SEC officials proved to be a systemic disappointment and lead me to conclude that the SEC securities' lawyers, if only through their investigative ineptitude and financial illiteracy, colluded to maintain large frauds such as the one to which Madoff later confessed."

Gary Agguire, a former SEC investigator who spoke to Congress a few years earlier, claimed he was fired for investigating a hedge fund too aggressively and said in a series of interviews, like the one below to the Guardian, that the SEC was in bed with Wall Street’s powerful players:

"What you have at the SEC is people rotating from jobs where you make $180,000 a year into jobs where you make over a million.  It's very friendly - it's a club. I'm here, I'm inside, now I'm outside, now I'm inside again.  When the SEC starts playing favorites and they decide not to go after Wall Street elite and focus on small fry, then they're not focusing on the players that really impact the capital markets. It's not the penny stock dealers that could trigger a credit crisis in this country."

So it should be no surprise to learn today that Linda Thomsen, who headed the enforcement division of the Securities and Exchange Commission during a time in which it oversaw a market meltdown and failed to catch Bernard Madoff’s Ponzi scheme, is apparently having no job security issues at all.  According to Legal Times, Davis Polk & Wardwell’s Washington office is adding her as yet another lawyer to its bench of former SEC officials.

Patrick Byrne, CEO of Overstock (OSTK) was at “a loss for words,” over the recent hiring, according to a blog entry at DeepCapture.com.  Though, he still had enough words to criticize Thomsen and the situation:

That would be the same Linda Thomsen against whom the SEC’s Office of the Inspector General recommended disciplanary action for her role in hanging out to dry SEC Senior Investigator Gary Aguirre, due to his impertinence in subpoenaing Morgan (MS) Stanley CEO John Mack, a Wall Streeter “with juice” (in the words of Aguirre’s boss), just because a trail of clues in “the most important insider trading case in 30 years” led directly to him.

That would be the same Enforcement Director to whom a recent report of the SEC’s own Office of the Inspector General was obliquely referring, in page after page, for 55 pages, in a report explaining how three well-organized  6th graders could have handled the nation’s naked shorting complaints better than did the SEC’s Enforcement Division.

That Linda Thomsen is the same one whose resumption of employment with white-shoe law firm Davis Polk & Wardwell (I say “resumption” because Ms. Thomsen worked at Davis Polk until she joined the SEC in 1995) was announced today in this gem ("SEC Enforcement Chief Joins Davis Polk") from the Blog of Legal Times (”Law and Lobbying in the Nation’s Capital”).

The announcement reads, with no detectable irony:

Linda Thomsen, who headed the SEC’s enforcement division until February, is starting as a partner in the firm’s white-collar defense and government investigations and enforcement practices in June. She will be joining former SEC commissioner Annette Nazareth, who started at Davis Polk last year, and Robert Colby, who joined the D.C. office this year after serving as deputy director of the SEC’s trading and markets division…

Thomsen practiced in Davis Polk’s New York office before joining the SEC in 1995. She started at the commission as assistant chief litigation counsel and went on to become head of enforcement in 2005. After leaving the SEC earlier this year, Thomsen says, “I had no preconceived ideas about where I was going to go, or what I was going to do.” - Translation: “I swear, it never occurred to me to go work for the law firm defending wealthy clients against whom I was overseeing cases until weeks ago.”

At the firm, Thomsen will advise clients on internal investigations and defend them against SEC probes. - Comment: Probes such as those ones she was overseeing weeks ago.

After serving at the agency for 14 years, Thomsen says she understands the kind of questions clients should be asking themselves to stay out of trouble with the commission. “I think I know and can see the kind of issues that get people into trouble, and the kinds of processes that cause them to, perhaps, ignore warning signs,” says Thomsen. - Comment: Yes, I am sure Ms. Thomsen is one of the world’s most recognized experts on the subject of processes that cause people to ignore warning signs.

[The comments in bold are from Patrick Byrne.]

If events in the recent past are any indication, Thomsen will likely quietly move onto her new job and the majority of the financial press will ignore this latest development.  But it leaves a humble investor to wonder, is there no shame on Wall Street?  Is our culture so deprived of valuing anything above the color of money that even our government officials, our financial journalists and our financial analysts are all, in a sense, colluding with a strange and sort of religious respect for anybody or anything that has power and may possibly help them reach the promised land of wealth, by any means?

It is, perhaps, easy to criticize old ways of thinking, filled with shame and guilt over silly ancient myths and superstitions.  But if a society is filled with people that have no shame or guilt at all, perhaps it encourages the reporter who stands in awe of a bank CEO, a regulator who trembles at the feet of a hedge fund manager.

But in the end it's probably much simpler than that.  Some psychologists say that one becomes what and who they surround themselves with, and in a world focused purely on money and profit, it is perhaps inevitable that the regulators and reporters will look up with respect at those they ought to watch over with skepticism.