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Let the Scams Begin - SEC's Proposed Rule on Private Offerings Encourages Risky Financial Industry Practices
Statement of Bartlett Naylor, Financial Policy Advocate, Public Citizen’s Congress Watch Division
WASHINGTON
If a proposal issued today by the Securities and Exchange Commission (SEC) is adopted, financial speculators looking to make a quick buck may soon be able to advertise high risk, shady deals to the public with the blessing of the federal government.
In the agency's first rulemaking effort following the April 5th passage of the Jumpstart Our Business Startups Act (the misnamed JOBS Act), the SEC is failing to propose concrete solutions that would prevent average investors from being duped by hedge funds managers and other issuers of private securities.
Transactions involving private offerings already result in more enforcement actions and investigations than any other kind of financial transaction, according to the North American Securities Administrators Association. The number of actions grew to 410 in 2011, a 60 percent increase from 2010.
Private offerings are so risky that, to date, hedge funds and other firms could only offer these high-risk deals to proven, "sophisticated" investors, such as professional money managers with whom they have an ongoing business relationship. The JOBS Act permits advertising such deals to the public.
One of the very few investor safeguards from Congress is the requirement that firms offering private securities have to take "reasonable steps" to ensure that the investor is sophisticated and has a net worth of $1 million or $200,000 in annual income. Significantly, the SEC's proposed rule fails to adequately define these "reasonable steps" a hedge fund is required to take before it can categorize a prospective client as sophisticated. This is a grave oversight.
SEC Commissioner Luis Aguilar opposed the proposed rule. But, while some of the other commissioners have acknowledged concerns about investor abuse, their sympathy won't be able to restore a pillaged retirement fund after the fact.
The SEC will accept public comment for 30 days before finalizing the rule so there's still time for them to do the right thing. We urge the SEC to rethink the final rule, and consider including more investor protections.
Public Citizen is a nonprofit consumer advocacy organization that champions the public interest in the halls of power. We defend democracy, resist corporate power and work to ensure that government works for the people - not for big corporations. Founded in 1971, we now have 500,000 members and supporters throughout the country.
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Democrats' Bill Would Extend Social Security and Medicare Solvency 'As Far as the Eye Can See'
"Working-class seniors pay into Social Security and Medicare their whole careers so they can enjoy a dignified retirement, but they end up paying a much larger share of their income in taxes than billionaires because the tax code is rigged in favor of the rich."
May 09, 2025
Social Security and Medicare protect tens of millions of American senior citizens from poverty and medical bankruptcy each year, but economic justice advocates have long said the programs would be strengthened and remain fully solvent for as long as possible if the richest Americans contributed more to them—and on Thursday two Democratic lawmakers introduced legislation to ensure they do.
The bicameral bill, the Medicare and Social Security Fair Share Act, was reintroduced by Sen. Sheldon Whitehouse (D-R.I.) and Rep. Brendan Boyle (D-Pa.), with the aim of requiring people with yearly incomes of more than $400,000 to contribute a fairer share of their wealth to the two programs.
Currently the maximum amount of earnings for which American workers must pay Social Security taxes is just over $176,000.
The bill would lift the Social Security tax cap "to ensure that no matter the source of their income, high-income taxpayers would pay the same tax rate on their income exceeding that threshold," said the lawmakers in a press statement.
It would also increase the Medicare tax rate for income above $400,000 by 1.2% and include a provision ensuring owners of hedge funds and private equity firms can no longer avoid Medicare taxes.
Whitehouse and Boyle introduced the bill as the Trump administration and congressional Republicans work to slash Social Security—confirming Wall Street executive Frank Bisignano, who has backed billionaire Elon Musk's spending cuts at the Department of Government Efficiency (DOGE), to run the program this week.
"While Republicans are pushing a $7 trillion tax giveaway to the ultrarich, we're working to protect the benefits that millions of Americans have earned—and we won't let them be stolen to fund another billionaire windfall."
Republicans have also suggested Medicare could be slashed in order to pay for tax cuts for the wealthiest Americans and have pushed to expand privatized Medicare Advantage plans.
"Working-class seniors pay into Social Security and Medicare their whole careers so they can enjoy a dignified retirement, but they end up paying a much larger share of their income in taxes than billionaires because the tax code is rigged in favor of the rich," said Whitehouse. "As the Trump administration and Congressional Republicans gear up to deliver budget-busting giveaways for their billionaire donors, I will continue pushing to make our tax code fair and protect these twin pillars of retirement security as far as the eye can see."
Actuaries at the Centers for Medicare and Medicaid Services and Social Security Administration estimated that Whitehouse and Boyle's proposal would extend Social Security and Medicare solvency by at least 75 years.
Without new revenue, the trust funds that finance Medicare and Social Security are projected to be 100% solvent only through 2036 and 2033, respectively.
The legislation is endorsed by groups including Social Security Works, the National Council on Aging, and the Center for Medicare Advocacy.
"From my first day in Congress, I've pledged to protect the long-term stability of Social Security and Medicare—two bedrock promises our country made to seniors, workers, and people with disabilities," said Boyle. "Now, with [President] Donald Trump, Elon Musk, and DOGE-fueled billionaires openly attacking these programs, that fight is more urgent than ever."
"While Republicans are pushing a $7 trillion tax giveaway to the ultrarich," he said, "we're working to protect the benefits that millions of Americans have earned—and we won't let them be stolen to fund another billionaire windfall."
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Warnings Grow Over US and Israel-Backed Plan for Gaza Aid
The plan "contravenes basic humanitarian principles," said a spokesperson for the United Nation's children's agency.
May 09, 2025
United Nations aid officials have rejected a U.S. and Israel-backed plan for aid delivery in Gaza that reportedly involves the use of a private foundation and U.S. military security contractors to deliver far less humanitarian assistance than the besieged enclave needs.
Jens Laerke, a spokesperson for the U.N.'s Office for the Coordination of Humanitarian Affairs (OCHA), warned Friday that the agency "will not participate."
"There is no reason to put in place a system that is at odds with the DNA of any principled humanitarian organization," Laerke told the BBC.
Since early March, Israel has blocked aid from entering Gaza, compounding widespread misery and hunger in the besieged enclave as Israel continues to mount a deadly military campaign there. U.N. officials have decried the fact that aid is close at hand but is not being allowed in.
Speaking in Jerusalem on Friday, U.S. Ambassador to Israel Mike Huckabee said that the plan involves a private U.S.-backed foundation, which will distribute aid from a set number of distribution sites, according to CNN. Huckabee said the idea is to create a system that prevents Hamas from obtaining the aid.
The private entity, called the Gaza Humanitarian Foundation, would administer those distribution sites using private U.S. military contractors and aid workers, according to CNN.
The plan reportedly entails only allowing 60 aid trucks a day, a sliver of what was allowed to enter the enclave during the two-month cease-fire that Israel ended in March. A document from the Gaza Humanitarian Foundation states that there will initially be four distribution sites aimed at providing 1.2 million Palestinians in its first phase, or 60% of Gaza's population.
According to the The New YorkTimes, under the current aid distribution system, the U.N. says there are 400 distribution points.
Huckabee said that Israel would not be involved in delivering aid, but that Israeli forces would handle security around the distribution sites.
The Times of Israel, citing officials familiar with the plan, reported that the Israeli government and military have been involved in putting the plan together, even if the Gaza Humanitarian Foundation is the entity that is slated to distribute the aid.
Reporting from The Washington Postpublished Monday, which cited unnamed Israeli officials and aid workers, framed the emerging plan as an Israeli initiative to take control of aid distribution in Gaza. The Post's reporting also stated that the distribution centers would be all be located in the south of Gaza.
The Post spoke with officials from a dozen international aid groups working in Gaza, who expressed concerns that restricting aid to a few locations would force more displacement and be discriminatory.
James Elder, spokesperson for the U.N.'s children's agency UNICEF, echoed this, according to the BBC, saying on Friday that the proposed plan would lead to more children suffering and that the decision to locate all the distribution centers in the south appeared designed to weaponize aid as "bait" to force Palestinians to be displaced once again.
The plan "contravenes basic humanitarian principles" and appears designed to "reinforce control over life-sustaining items as a pressure tactic," Elder said, according to U.N. News.
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'This Is Not Normal': Newark Mayor Ras Baraka Arrested at Contested ICE Detention Facility
"They are arresting elected officials for peacefully opposing the regime's illegal actions."
May 09, 2025
This is a developing story... Please check back for possible updates...
Democratic Newark Mayor Ras Baraka was arrested Friday afternoon at a newly reopened immigrant detention facility in New Jersey's largest city.
Baraka was accompanying three of the state's congressional Democrats to Delaney Hall, an Immigration and Customs Enforcement (ICE) facility operated by the private prison company the GEO Group.
The 1,196-bed facility—the first immigrant detention center to open since U.S. President Donald Trump returned to office in January after campaigning on mass deportations—began housing detainees on May 1, despite an ongoing legal battle over its operation.
Video footage posted online shows a verbal altercation between Baraka—who is running for governor and has been critical of ICE action under Trump—and men in blue jackets labeled "police."
According toPIX11:
Witnesses said the arrest came after Baraka attempted to join a scheduled tour of the facility with three members of New Jersey's congressional delegation, Reps. Robert Menendez, LaMonica McIver, and Bonnie Watson Coleman.
When federal officials blocked his entry, a heated argument broke out, according to Viri Martinez, an activist with the New Jersey Alliance for Immigrant Justice. It continued even after Baraka returned to the public side of the gates.
"There was yelling and pushing," Martinez said. "Then the officers swarmed Baraka. They threw one of the organizers to the ground. They put Baraka handcuffs and put him in an unmarked car."
Amanda Lee, a journalist with New Jersey's News 12, posted footage of the crowd near the gate and the mayor being led away in handcuffs.
Alina Habba, the interim U.S. attorney for the District of New Jersey,
said on social media that Baraka "committed trespass and ignored multiple warnings from Homeland Security Investigations to remove himself from the ICE detention center in Newark, New Jersey this afternoon. He has willingly chosen to disregard the law. That will not stand in this state. He has been taken into custody. NO ONE IS ABOVE THE LAW."
Baraka's office told PIX11 that the mayor was taken to an ICE field office at 620 Frelinghuysen Ave. in Newark, adding that "we are actively monitoring and will provide more details as they become available."
The members of Congress explained on social media that they were at the facility to conduct oversight. As Watson Coleman put it: "We're at Delaney Hall, an ICE prison in Newark that opened without permission from the city and in violation of local ordinances. We've heard stories of what it's like in other ICE prisons. We're exercising our oversight authority to see for ourselves."
The U.S. Department of Homeland Security (DHS) released a statement that did not address Baraka's arrested but said that "as a bus of detainees was entering the security gate of Delaney Hall Detention Center, a group of protestors, including two members of the U.S. House of Representatives, stormed the gate and broke into the detention facility," naming Menendez and Watson Coleman.
DHS Assistant Secretary Tricia McLaughlin said that "members of Congress storming into a detention facility goes beyond a bizarre political stunt and puts the safety of our law enforcement agents and detainees at risk. Members of Congress are not above the law and cannot illegally break into detention facilities. Had these members requested a tour, we would have facilitated a tour of the facility. This is an evolving situation."
The department also claimed that "the allegations made by Newark politicians that Delaney does not have the proper permitting are false. We have valid permits, and inspections for plumbing and electricity, and fire codes have been cleared."
Responding to the news of Baraka's arrest on social media Friday, Kat Abughazaleh, a Democratic congressional candidate in Illinois, said in all caps: "They are arresting elected officials for peacefully opposing the regime's illegal actions. Do not allow them to overwhelm you. This is not normal."
I am outraged by the unjust arrest of Newark Mayor Ras Baraka earlier this afternoon outside of Delaney Hall in Newark. I am calling for his immediate release by federal law enforcement.
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— Governor Phil Murphy (@govmurphy.bsky.social) May 9, 2025 at 4:30 PM
Maurice Mitchell, national director of the Working Families Party, said in a statement that "Mayor Baraka's arrest during an oversight visit to an ICE facility in Newark is shocking overreach of power, even by Trump standards."
"Trump and his cronies are pulling straight from the authoritarian playbook. They want to silence anyone who seeks to hold them accountable," he added. "Mayor Baraka must be released immediately, and New Jersey elected officials must be allowed inside the Delaney Hall ICE facility."
ACLU of New Jersey executive director Amol Sinha similarly condemned Baraka's arrest as "a shameful escalation of the Trump administration's intimidation campaign against officials who refuse to do their bidding."
"Mayor Baraka—and lawmakers across New Jersey and the country—are being targeted by the Trump administration for refusing to be complicit with its ongoing violations of due process," said Sinha. "Mayor Baraka must be immediately released from custody, and the Trump administration must end its assault on the fundamental rights at the core of our democracy."
The group Indivisible declared his arrest "a warning sign of just how far Trump and his allies are willing to go to silence dissent," and "authoritarian behavior, plain and simple."
"For months, Trump has been using ICE as a political weapon, targeting immigrants, communities of color, and students exercising their right to free speech," Indivisible noted. "Now, it's being used to intimidate elected officials who dare to speak out. That should alarm everyone."
"Mayor Baraka was peacefully demanding answers on dangerous policies that hurt his community. He was being a leader. We demand the immediate release of Mayor Baraka, and an end to these unlawful and unconstitutional detainments. We won't be intimidated or silenced," the group added. "We stand with Mayor Baraka and every brave leader who refuses to back down, and call on every other elected leader to follow his courageous example."
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