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Yolanda Quixote

ON DEC. 30, 2006, more than a dozen SEC commissioners and employees received a lengthy email from a woman referring to herself as Miss SEC 2006.

ON DEC. 30, 2006, more than a dozen SEC commissioners and employees received a lengthy email from a woman referring to herself as Miss SEC 2006. “Most Esteemed Colleagues and soon to be employees of mine (SEC staff),” the email began. “I have been urged to run for SEC Chairman in 2008.”

The author of that email was Yolanda Holtzee, a 50-year-old money manager, whistleblower, industry gossip and wanna-be cop who lives in a three-story house in Seattle, Wash., with a roommate and six cats, collects stuffed animals and occasionally visits a shooting range for pistol practice. Her name is familiar to many securities industry regulators, lawyers, money managers, investors, brokers, executives and press. After all, by her own account, she sends 10 to 25 emails a day to people in the industry (often under the email handle LoveLEHgirl and often at three or four in the morning) — many of which are then forwarded on to reporters who are urged to follow up on her “hot” tips. Indeed, her stream of emails on a wide range of regulatory subjects is such a torrent that one sometimes wonders how she finds the time to trade stocks. She's also prolific on industry message boards, including Registered Rep.'s advisor forums (, where you can spot her handiwork under the alias ymh_ymh_ymh.

Holtzee has not been shy about courting journalists and, last April 18, a profile of her appeared on the front page of The Wall Street Journal. The piece described her efforts to help regulators uncover fraud and catch criminals — some of which have been quite successful. It also captured the colorful language she uses in emails: “baby” brokers, regulatory “spankings,” “butt kissers” and “sissies” are favorites. Shortly after that story ran, a blog called penned an entry about the two contenders for Miss SEC 2006: “It's gonna be a close call between Insider Trading hottie Sonja Anticevic and the Seattle Sleuth Yolanda Holtzee,” the blogger wrote. Yolanda seems to like the attention: She included a Miss SEC 2006 reference and a link to the entry in her Dec. 30 email to SEC staff.

Is Holtzee serious about the SEC chairmanship? She says absolutely, yes. “It's not that I think that I'm that great. But [current SEC Chairman] Chris Cox was less qualified when he was nominated and confirmed than I am even right now, in terms of knowledge of the capital markets and relationships with regulators and Wall Street firms,” she says in a telephone conversation. Cox is a graduate of Harvard business school and Harvard law school (he received the two degrees simultaneously), he was a member of Congress for 17 years and he served in a leadership capacity as a senior member of every Congressional committee that has jurisdiction over investor protection and U.S. capital markets. Before he began his career in Congress, he worked his way up to partner at Lathan & Watkins, one of the premier defense law firms in the world. “He's a bright man. I'm not putting him down,” Holtzee says. “But I think changes are needed.”

Specifically, Holtzee thinks that the SEC is soft on crime (she's not the only one), and she blames what she says is a clubby atmosphere, a willingness to look the other way when other members of that club cause trouble, as well as pay levels that are too low to attract or retain talented staff. In that Dec. 30 email — the first of her “campaign,” she says — Yolanda pledged to accomplish 10 things as chairman of the SEC, including: “Pay raises for everyone deemed ‘man’ enough to serve in 2009 and 2010”; the lowest turnover of district administrators and directors; and the highest number of enforcement cases ever brought — past, present or future.

Yolanda says she would push for better funding to foot the bill for those pay increases. She also wants to develop a better working relationship between the SEC, state securities regulators and the Department of Justice, which have been recently trying to coordinate their efforts to stamp out fraud. And she thinks that unethical broker/dealer branch managers and executives need to be dealt with more severely — too many of them scapegoat brokers, she says, whenever they get into trouble, and too many of them harass and discriminate against women and minorities.

She may be eccentric, and it may be wildly improbable, but there are some respectable industry players who are going to bat for her. A handful of former regulators, money managers and plaintiffs' lawyers say she's got a nose for hunting down criminals and a passion for rooting out injustice and crime. And they say she might shake things up at an organization that has, in recent years, been accused of focusing too much on the little stuff — whether firms are crossing their t's and dotting their i's on disclosure forms, for example — and missing some of the biggest cases of fraud (Enron, Worldcom) until after the harm has been done. In the meantime, Yolanda has been digging up insider trading, pump-and-dump schemes and market manipulation by simply snooping around chat rooms and investor Web sites.

“In my opinion, the answer is yes, she would make a good commissioner, because the SEC commissioner has to care about and be passionate about shareholder protection,” says Lewis Kahn, managing partner at securities fraud class-action firm Kahn Gauthier Swick. “There are a lot of them who may believe that they care, but how hard do you work, how zealous are you about prosecuting fraud? The SEC is very weak on enforcement. I know Yolanda lives and breathes this.”


Yolanda's resume is quite different from that of Mr. Cox: She got a degree in physics and chemistry with a minor in business administration in night school at Troy State University in Alabama while she was in the Army. She later earned a masters in operations management from the University of South Carolina. After seven years in the Army, she went to work for the Miller Brewing Company and held various sales and management positions in packaging, aluminum and steel and beer beverage companies for the next 15 years. But she eventually got bored with corporate America, she says, and began managing money for a handful of wealthy investors. Although Holtzee uses some hedge fund investment strategies, the portfolio she manages is technically a pooled private investment club, not a hedge fund, she says. As for her strategy, she says 18 months is the longest she will hold a short or long bias in any particular position. She is not a registered investment advisor, and she won't offer any performance information. The only asset figure she will provide is “under $1 billion.”

Perhaps, more important — for her current aspirations anyway — over the past five years she has gotten to know a lot of regulators and attorneys. She sends them tips about insider trading, penny-stock pump-and-dump schemes, accounting fraud and market manipulation; some of them email her back. Indeed, a number of those tips have led to cases against the companies and individuals involved — all together, some 20 cases, she says. (An SEC spokesman said he doesn't deny this number but can't confirm it either.) She began emailing regulators in 2002, and Mary Schapiro was her first victim. “It was sarcastic, not nice,” Holtzee says. “I cold emailed her about a situation with Prudential in Chicago: ‘Are you aware of this, are you aware of that, hut two three four.’ And she replied back in a nice way. After that there wasn't ever any more sarcasm directed at her,” she says.

These days, Yolanda has usually showered, eaten breakfast and drunk her coffee by 5 a.m., and is “operating at 100 percent efficiency.” She spends much of her day trolling the Web, looking at penny-stock and daytrading Web sites, reading chat boards, looking at price charts and googling up connections when something seems fishy. “It's wonderful. It's not so much a skill; you almost have to have an innate sixth sense,” she says. Then she emails her findings to regulators or lawyers if she thinks they are worth following up. For example, in July of last year, she let the SEC know about a company named FrontHaul Group, which was issuing fraudulent press releases with Lehman Brothers' name on them in a pump-and-dump scam. FrontHaul later merged with Conversion Solutions Holding, which has since been charged with securities fraud by the Atlanta Securities Division. (The SEC couldn't confirm that Holtzee was instrumental in the case.)

More recently, she began working with the SEC on an insider-trading case involving a small-cap company that was taken private by a private-equity firm. (She can't provide any more specifics because it's still under investigation.) In early January, she had a 45-minute conference call with the SEC folks in Miami regarding some pump-and-dump scams they're investigating. “I could probably bring one or two [cases] a week if I could get someone interested in them,” she says. Since The Wall Street Journal article, other whistleblowers have begun sending their own tips to her, because they suspect she will be able to get things done with regulators faster.

Yolanda also knows scores of reps and financial advisors (and sometimes their clients), and seems to have a skill for getting the latest dope on when and why branch managers are leaving what firm. She also collects gossip on how ethical such-and-such an executive or branch manager is with his crew, how well he treats his brokers, whether he's a drinker and a womanizer, whether he discriminates and who else is involved. She is friendly with Hydie Sumner, who sued Merrill Lynch successfully in 2004 for sexual discrimination and now works at Wachovia, for example. And brokers often email Yolanda with questions or frustrations, thinking she has the connections to find things out or make something happen.


Without a doubt, Yolanda is taken very seriously as a whistleblower. “I know generally that her emails are paid attention to by our staff,” says SEC Commissioner Roel Campos in an email. “I read them and find them informative. I pass her emails to members of our enforcement team for follow-up. I know that her tips have resulted in some cases being brought.”

But as a potential SEC chairman? That's a lot less clear. In early January, Yolanda began asking friends, acquaintances and email buddies (about 75 in all) to endorse her and to contact their state senators and representatives. The president appoints SEC chairmen, but members of Congress can offer potential nominations. A number of individual retail investors (“Joe and Jill Sixpack types, not traders, but investors,” she says), as well as fellow money managers, former colleagues, plaintiffs' lawyers and broker friends have told her they're on it. In fact, Registered Rep. spoke to several individuals who said they have contacted their state senators. But it's going to take a lot more than that.

Thus far, no one has ever “run” for SEC chairman, says Stanley Sporkin, who worked for the SEC from 1961 to 1981 and directed the Division of Enforcement for seven years. “I don't know how you campaign for the job. I don't know anyone who has done that successfully. It's strictly a political appointment,” says Sporkin, who says he has never heard of Yolanda Holtzee. “But if she got Congressional support, and support from other people in the industry, that could be very helpful. Someone who is anxious to do the right thing and protect investors could be good in that position,” he says.

Kenneth Vianale, a Florida-based class-action securities lawyer who served as Assistant U.S. Attorney for the Southern District of New York in the late 1970s and early 1980s, says he has agreed to talk to his senator Bill Nelson (D-FL), whom he knows well, on Yolanda's behalf. And he thinks she actually has a shot at the SEC chairmanship if a Democrat wins the next presidential election. “I mean, if you really want it enough, you put yourself in front of the right people, who make the decisions,” he says. Yolanda is a registered Republican who is liberal on social issues, conservative on fiscal policy and tough on all kinds of crime — she believes in the death penalty. But, she is seeking the support of potential Democratic candidates Hillary Clinton and Barack Obama. “I've contacted Hillary, Obama and people that they know,” she says. She hasn't yet heard back.

“There's no question in my mind that she would be a very good cop. And I think that what that position needs is a good cop,” says Vianale, who has been emailing with Yolanda for about three years and has worked with his share of cops. As Assistant United States Attorney, Vianale worked extensively in the Securities Fraud Unit and held the executive position of deputy chief of the Criminal Division in 1995. “She has a very good nose for fraud in the financial markets. And she seems to me to be a very tough-minded person,” he adds.

Tom Ajamie, a well-connected plaintiffs' lawyer with Ajamie LLP in Houston, who often receives emails from Yolanda but has never met her, says he would love to have someone like Yolanda in the top securities watchdog spot. “She's clearly an investor advocate, and definitely an advocate of brokers, by the way. She feels there's dirtiness in the industry and she's trying to clean it out. I think from her perspective, where she sees injustice in the industry she attacks it.”

But she would have to polish her approach, he says, and that would take strategy and planning. “Does she have a chance? I don't know. She could, but she'd need to cultivate broader appeal. She'd have to make the right political connections,” he says. “We would have to get her one or two consultants, help her develop a political image, put her in shape to get an appointment and give her direction.” Ajamie says he personally would be willing to help out if a group came together to support her from various sectors — including, say, a government prosecutor and a current or former regulator from one of the agencies. In any case, time is on her side, he says.

Vianale says he thinks that some of her personal eccentricities could be a plus for the job, but that it can get to be too much. “She's a little idiosyncratic, and most of us in the industry are not. My thinking is that it's a plus in that she's plain-speaking. On the other hand, she says things that are sometimes a little shocking. That's a good thing in some ways, but you need to learn to tone it down when you're with people in power.”

So far, Yolanda doesn't have many official political endorsements. That's hardly surprising: It's only been a few weeks since she first announced to anyone that she was interested, and only more recently did she begin to inform some of her other contacts about her SEC ambitions. More troubling, perhaps, is the fact that a couple of the individuals she suggested might eventually provide an endorsement, including William Galvin, Secretary of the Commonwealth, Massachusetts, said they didn't “know her” and couldn't comment for this article. (Yolanda explains that she is currently working with his office on a case, but has not spoken with him directly.) In addition, one of the SEC commissioners with whom she seems to email regularly, and with whom she says she gets along quite well, Paul Atkins, did not return emails or calls seeking comment. SEC Commissioner Campos, who she claims to be in touch with fairly often, would only say that he does read her emails and passes some of them along to enforcement staff.

Part of the problem is that many of the people Yolanda considers supporters are people she has only emailed but never spoken with, much less met. She is not ignorant of this shortcoming. “If I get enough support, and think it's viable, I'll attend some securities regulatory functions, campaign, schmooze, meet people in person,” she says.

And then there's the fact that the position has traditionally been filled by very politically connected people: Yolanda could well be shut out by the very clubbiness she dislikes. “It would be a long shot. To this point, if you look at the history of chairmen, they've either had Wall Street or law-firm ties. This is where Yolanda would have the biggest difficulties,” says Peter Henning, former attorney in the SEC's enforcement division who is currently a professor of law at Wayne State University, began an email correspondence with Yolanda around the time that The Wall Street Journal story was published. “The SEC can be a very clubby place. The former director of enforcement gets hired to conduct internal investigations because all of his phone calls get returned in a minute. And the securities bar is rather clubby because people refer cases to one another. She's certainly not a member of that club.” He concedes, nonetheless, that it might be good to get someone in there who is not a member of the club — to shake things up.

Barry Goldsmith, former head of enforcement for the NASD, who received numerous emails from Yolanda when he was at NASD and had a few brief conversations with her over the phone, was very noncommittal about her chances. “Listen, Jesse Ventura, the professional wrestler, became governor of Minnesota. But, obviously, the SEC chairman requires a very broad skill set and experience,” he says. “But I wouldn't want to handicap or characterize her chances of success.”

It might not be the best time for a zealous investor-advocate and outsider like Holtzee to charge onto the scene: These days, the regulatory tide is turning back. “Easing up is the theme now,” says Sporkin. “I think the increased regulation is over with. That pendulum has swung.” Indeed, Cox is talking about turning back some of the reforms put in place with landmark Sarbanes-Oxley legislation. Then again, maybe that's precisely why the SEC needs someone like Yolanda on top.

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