The Securities and Exchange Commission

Abstract

Abstract This chapter focuses on the Securities and Exchange Commission’s numerous failures to engage in meaningful regulation and enforcement and recommends a fundamental solution that should substantially ameliorate the current unpalatable situation. As compared to yesteryear, the SEC no longer is viewed as a champion of investor protection. In its analysis, the chapter provides many examples, including: the Commission’s failure to adopt a current reporting system mandating disclosure (absent the existence of meritorious business justification) of all material information; its regulatory activism to insulate from private liability exposure certain misconduct engaged in by companies and their insiders; its levying of large money penalties against major enterprises without pursuing their officers and directors; and its refusal to implement statutory directives, including its failure to use the control person provision against corporate insiders. The solution to this unacceptable situation is to reconstitute the composition of SEC Commissioners. As elaborated upon in the chapter, this objective would be achieved by increasing the size of the Commission and requiring that the composition of the SEC Commissioners (including the SEC Chair) would be far more diverse than is current practice.

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