This article originally appeared in Bloomberg View on February 8th, 2013.

The sales pitch for President Barack Obama’s nominee to run the Securities and Exchange Commission goes something like this:

Mary Jo White was a tough U.S. attorney for the Southern District of New York who prosecuted mobsters and terrorists. She spent the past 10 years representing Wall Street, so she knows something about the legerdemain of banksters. And — insert violin solo here — she is a patriot, willing to give up millions of dollars in income as chairman of the litigation department at Debevoise & Plimpton LLP for a lousy government salary. (Although, with a little luck, she will make up for that once she adds “former SEC chairman” to her resume.)

The arguments in support of White are as old and tired as the government-to-private-practice hustle that they endorse.

Her supporters say she has the integrity to shift from Wall Street defender to champion of securities laws. But it’s hard to take seriously the notion that White will help crack complicated cases with her inside knowledge of how the bad guys work, an argument that often gets thrown around when Wall Street lawyers are tapped to be regulators. “People from the private sector know where the bodies are buried,” former SEC Chairman Mary Schapiro told the Washington Post after White’s nomination last month.

Top Spots

Maybe so, but the SEC and Justice Department have had former defense lawyers checking in and out of top spots for years, and it hasn’t led to any big-bank carnage among the people who orchestrated flakey derivatives, self-destructing collateralized-debt obligations or other outrages. When was the last time you saw anyone from a well-known bank doing a perp walk for his role in the financial crisis?

The Web pages of the best-known law firms give an idea of who the real winners are in the revolving door. Debevoise says it’s “the only law firm to have former U.S. and U.K. attorneys general as well as a Queen’s Counsel.” Cleary Gottlieb Stein & Hamilton LLP tallies 10 former federal prosecutors and three former SEC general counsels. At Covington & Burling LLP, they boast of having “convinced the SEC not to pursue an enforcement action” against one client, and that partner Bruce Baird, a former assistant U.S. attorney, persuaded regulators “not to proceed with cases on a significant number of occasions.”

It isn’t often we get an inside look at how onetime regulators work their disappearing-case magic, but a celebrated example that wound up under a microscope involved none other than White. When Morgan Stanley was considering hiring John Mack to be its chief executive officer in 2005, the securities firm’s board was concerned about an SEC investigation into possible insider trading involving Mack and Arthur Samberg, the former manager of the hedge fund Pequot Capital Management Inc.

The board retained White, who called SEC Enforcement Director Linda Thomsen on June 27, 2005, to get intelligence on Mack’s legal exposure. Three days later, White told Morgan Stanley’s board that she had seen “no evidence of any involvement by Mr. Mack in insider trading or other wrongdoing.”

Thomsen had let on to White that there was “smoke but not fire” in e-mails between Mack and Samberg, and privately worried that it could be disruptive to markets if Mack became CEO and then wound up as an SEC target. “It could have ripple effects that makes the markets go haywire,” Thomsen told a Senate committee — an overblown fear if ever there was one.

Wrongful Firing

Mack was never accused of wrongdoing. Gary Aguirre, an SEC lawyer who had been pushing to question Mack, was fired a few months after White’s call. He later won $775,000 from the SEC in a wrongful dismissal suit.

White declined to comment, said Debevoise spokeswoman Gabriella Schoff.

A revamp at the SEC that included improved policies for handling complaints and tips was supposed to boost morale. Yet the SEC’s ranking in an annual employee survey of “Best Places to Work in the Federal Government” has dropped steadily since 2007, with the SEC placing 19th of 22 midsized federal agencies last year. SEC workers’ view of the leadership of the most senior staff was worst among the categories they were asked about.

That makes sense considering some of the private conversations that became public about their bosses. The SEC’s own general counsel (now at Cleary Gottlieb), David Becker, e-mailed former SEC Commissioner Annette Nazareth in 2009 after she had left for Davis Polk & Wardwell LLP and referred to “the inanity” of the idea of having an investor advocate at the agency, according to a Bloomberg News article last year.

It would be nice if White turned out to have what it takes to pump up morale and turn the SEC into a place where inspired investor advocates get the top jobs, but there are reasons to be doubtful. White is worried about being too hard on corporate criminals. She told the newsletter Corporate Crime Reporter in 2005 that prosecutors considering criminal charges should be “very concerned about the impact on the innocent employees or shareholders.”

White won’t play a direct role in prosecuting companies at the SEC, of course. But given her views on indictments, it’s hard to imagine she will encourage her staff to refer cases against companies to criminal authorities.

It’s also a worry that she knows too much about the career perils of being aggressive as a regulator. In talking about one of Debevoise’s hires from the SEC, she testified in a 2007 deposition that she needed to check whether the candidate had been so tough as a regulator that it would hurt his ability “to function well in the private sector.” Commitment to the job and mission is a good thing in government, she said, or at least it is “to a point.”

If we’re lucky, White, 65, will decide that a do-gooder legacy is more important than the next multimillion-dollar job.

This article originally appeared in Bloomberg View on January 3rd, 2013.

I have the ultimate hot tip if you’re obsessing over what to do with your portfolio in 2013: Ignore all the “How to Invest in 2013” nonsense that you see in magazines, blogs and on business television this time of year.

My advice? When you see one of those how-to articles, retreat to the kitchen for what’s left of the holiday eggnog and shut off the computer. If some TV stock jock is interviewing a Wall Street star about a best pick for the year ahead, grab the remote and surf for a rerun of “Here Comes Honey Boo Boo.” At least it won’t be you who is being exploited.

There is a good chance that you will lose money if you follow the 2013 top stock recommendations. And the grander the promise of profits, the more you should worry about getting burned.

Personal-finance news became a growing subgenre of business journalism in the 1970s, after companies started dropping defined-benefit retirement plans and the public “was thrown into this system and forced to make their way” says Dean Starkman, who runs a business-journalism blog at Columbia Journalism School. The resulting coverage to help the public manage its own money “perpetuates the idea that individuals can beat the market,” he says, “and that’s just not true.”

An army of commentators, many with abysmal track records, helps spread the useless predictions. You will see them quoted, photographed for magazine cover stories and trotted out for appearances at investor conferences.

“The entire conversation is corrupt,” says Starkman, who sees much of personal-finance writing as marketing material for the investment industry.

Few Exceptions

With a smattering of exceptions, even the best of the annual how-to-invest offerings will leave you winning about half the time, which of course means losing half the time. And what’s the point of paying commissions to end up where you started? Smart Money’s “Where to Invest 2012,” for example, picked six winners and four losers. The “Guru Round Up: Best Investment Ideas for 2012” that ran in Forbes magazine on Jan. 4, 2012, had three winners and four losers.

Even when a best-stocks list manages to keep up with the stock-market averages, which you can do in an index fund, it doesn’t necessarily help actual investors. My guess is that investors in real life don’t have the resources to buy more than one or two of the recommendations on any given tout list. Buy the wrong one, and it doesn’t matter if the list’s author is taking a bow for outperforming the Standard & Poor’s 500.

Along with the year-ahead coverage, be wary of the ambitious journalistic efforts that purport to impart brilliant investment ideas for the long term. Fortune magazine’s August 2000 list of “10 Stocks to Last the Decade” included Enron Corp. (which failed), Nokia Oyj (which fell from $43 to $9.63 during the next 10 years), Nortel Networks Corp. (which filed for bankruptcy protection in 2009) and Broadcom Corp. (which fell from $143 to $36 during the decade after the article).

In case no one has let you in on the secret, it’s old news that money managers rarely beat the stock-market indexes. So why pay attention when some journalist under orders to interview those managers woos you with headlines that promise a winning list of investments for the year ahead?

Ditto for the usefulness of predictions as to which way the markets and the economy are headed. Beneath the headline “Little Enthusiasm for Equities Among Advisers,” Investment News, a newsletter that caters to investment advisers, said on Jan. 1, 2012, that only 43 percent of advisers planned to increase their clients’ equity holdings, down from 63 percent in 2011. The S&P 500, of course, proceeded to go up 13 percent in 2012, the year advisers were more negative. It was little changed in 2011, the year they expected significant gains.

And then there was arguably the worst market call of the year, made Jan. 23, 2012, by newsletter writer Joseph Granville. He told Bloomberg Television that day that the Dow Jones Industrial Average would decline 4,000 points by year-end. The Dow wound up rising 887 points.

Terrible predictions ought to be career killers, but they aren’t. “There is no prediction so stupid you won’t be invited back,” Starkman says. Apparently so. Donald Luskin, the Trend Macrolytics LLC chief investment officer who is a contributor to CNBC, wrote in the Washington Post on Sept. 14, 2008, that doomsayers on the economy had it all wrong. The facts suggested that we were not on the brink of a recession, but of “accelerating prosperity,” he wrote. Lehman Brothers Holdings Inc., of course, collapsed the next day, shifting the financial catastrophe of 2008 into overdrive.

‘Batting Average’

Myron Kandel, founding financial editor at CNN, says there is a way to raise standards. Qualified professionals should be used as sources, Kandel says, and the public should be told how the person’s past predictions have fared. Otherwise, it’s “like evaluating a baseball player without mentioning his batting average,” he says.

That sort of policy might not sit well in a personal-finance industry where everybody except the small investor seems to profit from the status quo. Barry Ritholtz, the chief executive officer of Fusion IQ, said he once had the temerity to ask a magazine editor if he could contribute an item about the foolishness of financial forecasting after having been invited to write a forecast for the 2004 stock market. The editor advised Ritholtz that it was a big double-issue that sold a lot of advertising, and the format wasn’t going to change. “So do you want to be in it or not?” the editor asked. Ritholtz dutifully wrote up his prediction of a year-end Dow close of 10,403 (it ended the year at 10,783).

I can, with confidence, pass on this one prediction for 2013: A lot more experts will dole out financial advice. Few will say anything worth listening to.

This article originally appeared in Bloomberg View on December 3rd, 2012.

I know we’re just settling in with our popcorn for the scene where the lawyers and PR handlers transform disgrace into opportunity for the players in the David Petraeus story.

Already Petraeus is on the contrition circuit, saying last week he “screwed up royally.” Why next thing you know, he will be nominated to replace Hillary Clinton at the State Department.

But before we move on to “Act II: The Image Rehab,” could we clear up this business about how women get depicted when the stuff hits the fan in a scandal?

Some of you are feeling sad that Petraeus, the retired four-star U.S. Army general who had an affair with the author of his biography “All In: The Education of General David Petraeus,” had to quit his job as Central Intelligence Agency director last month after admitting to an extramarital affair. “They threw this poor fellow to the wolves,” celebrity divorce lawyer Raoul Felder told the Daily Beast’s “Beast TV.”

Poor fellow, indeed, getting his reputation tarnished for engaging in indiscretions with Paula Broadwell, a married woman who surely must be responsible for the fall of our military hero, considering media commentary that dubbed her a slut and a cunning seductress.

How could this bad result have come to such a good guy?

“From what we know now, he wasn’t an alcoholic or a drug addict — something that might impair his thinking,” wrote columnist Susan Reimer in the Baltimore Sun. In fact, “he did nothing truly weird, like Rep. Anthony Weiner, who sent those cell-phone pictures of his crotch to random women.”

Behold Man

He probably wasn’t a bank robber or an animal abuser or an inside trader, either, and from what I can tell, the only things he is guilty of are cheating on his wife and a surfeit of professional preening.

But there is something a little bit off when one party to a sex scandal is congratulated for the sins he managed not to commit while the other gets attacked as “a shameless, self promoting prom queen,” which is the way Broadwell was described by an unidentified military officer in the blog Business Insider. (Memo to Mr. Unidentified Military Officer: Next time you get on the phone for a media interview, show a little military-style courage and attach your name to those smears.)

Petraeus is no stranger to self-promotion himself, and several writers have called him out both for his assiduous courting of the reporters who covered him and for his tacky decision to adorn his civilian clothes with military medals for a recent speech in Washington.

But that self-promotion hasn’t led to any portrayals of Petraeus as “a shameless self promoting prom king.”

I have, though, seen a lot of stories that referred to Broadwell as Petraeus’s mistress. And so has J. Nathan Matias, a research assistant at the MIT Center for Civic Media who studies gender representation in the media. Matias used a news database called Media Cloud to get an idea of how Petraeus and Broadwell were being depicted in mainstream media and in blogs, and noticed that the word “mistress” was being used in such varied places as USA Today, Newsweek and Slate.com. Bloomberg View and Bloomberg Businessweek have also referred to Broadwell as his mistress.

“If I were trying to write a piece, I wouldn’t refer to her in that kind of possessive way,” Matias told me. “I’d try to find language where I’d say they were having an affair, and identify her in terms of who she is in society, just as they are identifying Petraeus.”

Readers coming across the word “mistress” tend to visualize a woman who provides sex in exchange for cushy, rent-free living and a lot of high-end shopping, Matias said. That label is “kind of demeaning” in any event, he said, but doesn’t even apply in the case of Broadwell, a lieutenant colonel in the U.S. Army Reserve, a West Point graduate and recipient of two master’s degrees.

Lost Virtue

“She is getting the typical response to the scarlet letter woman — he is a man, so he’s weak, but she is crazy, demonic and a threat to national security,” said Victoria Pynchon, a blogger on negotiation and women’s issues at Forbes.com. “He’s mostly getting a pass, and the women in this story are getting no pass.” Equal treatment in the media would at least make Petraeus the sugar daddy to Broadwell’s mistress, wouldn’t you think?

In a blog post that managed to squeeze in the word “slut” four times, the conservative commentator Robert McCain noted that Broadwell had conducted interviews with Petraeus while the two were jogging, which apparently is reason to conclude “the slut was very cunning in her seduction.” Even the Washington Post found a way to present her as conniving, noting that she was “willing to take full advantage of her special access” to Petraeus while researching her book.

Petraeus, meanwhile, was described by an unnamed friend (does anyone talk for the record on this story?) as being “vulnerable” after leaving the camaraderie of the military to take the CIA post.

In the Baltimore Sun story, the author suggested “we need to learn to get past these bimbo eruptions.” Bimbo, from dictionary.com, is “an attractive but stupid young woman, especially one with loose morals.” What we really need to work on is getting journalism schools to teach students the apparently lost art of looking up words in the dictionary.