Reviewing the SEC, Reinvigorating the SEC
28 Pages Posted: 28 May 2010
Date Written: January 1, 2010
The Securities and Exchange Commission (SEC) celebrated its 75th anniversary in 2009. Ordinarily this would be a basis for celebrating the triumphs of the agency. However, the financial crisis of 2008 and the celebrated frauds and failures of the immediate past have provoked a wealth of criticism of the SEC and calls for fundamental change in the operations of the Commission. An objective review of the history of the SEC demonstrates that the recent failures are not unique. In fact, for each of these notable scandals and failures there is an important historical parallel in the history of the SEC. While one might conclude from this recurring pattern of frauds and failures that no set of reforms will ever eliminate periodic financial disasters and frauds, this paper takes a different perspective. The recurring pattern may be evidence that there are fundamental characteristics of how the SEC functions that contribute to its historic tendency to wait for events to happen before acting. This paper identifies and discusses these elements of the Commission’s "DNA" and offers recommendations for change.
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