Reframing and Reforming the Securities and Exchange Commission: Lessons from Literature on Change Leadership

Abstract

As a reaction to perceived and actual regulatory failures at the Securities and Exchange Commission (the SEC), from mistakes that contributed to the financial crisis to the Bernard Madoff affair, the SEC has been engaged in an operational transformation process. The growing literature on management and leadership in times of change -- change leadership literature -- offers a number of potentially valuable lenses through which we may assess reform at the SEC.

With the thought that securities regulators and others may learn valuable lessons about the SEC’s restructuring and reorganization from experts in change leadership, this Article explores a selected group of principles from change leadership literature. These principles are then mapped to recent and current changes at the SEC. The resulting analysis offers certain positive observations but also allows for certain critiques of, questions about, and advice concerning the processes by which change leaders are selected and institutional reform is undertaken at a federal agency. As a result, the Article highlights certain strengths of and exposes possible weaknesses in SEC reform efforts.

Keywords: Securities and Exchange Commission, SEC, change leadership, change management, leadership, agency, institution, reform, Kotter

JEL Classification: K20, K22, L32, M10, P11, P17