Saturday, October 17, 2009
The SEC is Hopeless, Kill It
"The [SEC's] independent watchdog called for a sweeping overhaul of the agency's investigation and enforcement practices on Tuesday, after a blistering report on the SEC's failure to detect Bernard L. Madoff's extensive Ponzi scheme. ... Representative Edolphus Towns, Democrat of New York, ... said the report found that more than 13 percent of the enforcement staff members said they had experienced a lack of impartiality among their supervisors, affecting the performance of their duties. 'There can be no place for partiality or political influence in our financial regulators,' Mr. Towns said. ... The changes recommended by Mr. [David] Kotz, who employed an outside firm, FTI Consulting, to conduct the review, also include giving the SEC staff access to outside publications and databases that cover the securities industry, while starting a collection system for capturing information from tips", my emphasis, Zachery Kouwe at the NYT, 30 September 2009, link: http://www.nytimes.com/2009/09/30/business/30sec.html.
Absent a change in SEC staffers' incentives, nothing will improve. Only 13%? Does that mean the other 87% know what kinds of cases to ignore so aren't pressured to ignore them?