SEC Wants Fixes, Not Fines

[seemslikeadream]

One of the key players in the makeover that Donaldson hopes will be a lasting legacy is Charles A. Fishkin, a former trader and Fidelity Investments risk-management executive who joined the SEC in July. Fishkin is hiring more than a dozen industry experts to sift through the collective knowledge of SEC staff, industry leaders and the academic community for clues to the next big issue. He also hopes to organize informational sessions with industry players -- portfolio managers, traders and the like -- so the SEC staff will have a better understanding of day-to-day life in the industry it regulates.

"What we are trying to do is get in early and treat problems in the least invasive way possible," Fishkin said in an interview. They'll be looking for gray areas -- new products, emerging conflicts of interest, ambiguous rules, dubious practices -- that the agency can then target for increased inspections, enforcement, new rules or investor education, he said.

This approach carries risks, particularly the problem known as "agency capture," a form of Stockholm syndrome in which regulators get to know the industry so well that they identify with, and reflexively defend, corporate practices that outsiders might view as improper, if not illegal, academics said.

The Federal Reserve banking regulators that Donaldson points to as a model have recently drawn harsh criticism for failing to crack down on Riggs Bank for violating laws designed to prevent money laundering, and the SEC itself was slow to address problems that had long been widespread on Wall Street, from biased stock research to abusive mutual fund trading practices.

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http://www.washingtonpost.com/wp-dyn/articles/A58091-2004Sep28.html

[Warpy]

There has got to be a way to nail that particular revolving door

shut, that door between regulatory agencies and industry and their lobbyists. Elected officials often go on to lucrative careers in industries directly affected by the committees they used to sit on, hired because they have both access to committee members and knowledge of how to grease the wheels. Unelected officials in agencies from the Pentagon to the SEC go back and forth between industry and the government to the point they can't remember who they're working for.

Well, they should be working for US, which means there needs to be a delay between the time they leave government and the time they can join any lobbying group or industry that they affected while in office, say a 5 year period between government and the affected industry.

Goverment would be able to retain qualified people, since they knew they'd have to wait 5 years after leaving before they could triple their salaries in private industry. Industry could benefit from having former political insiders, but not until they'd been out of government long enough that they'd no longer have full access.

Something's got to be done. We know what the current system is producing, corruption that works against the country and its people.

[Warpy]

1. Dupe, the board hiccupped