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I cannot find any hard data on the very long term trend of numbers of SEC enforcement actions, but they seem to be on the rise in the long term, though they hav

by nickff 12y ago

I cannot find any hard data on the very long term trend of numbers of SEC enforcement actions, but they seem to be on the rise in the long term, though they have fluctuated greatly. From the books I've read and interviews I've heard, it seems that the opposite is true; financial sector prosecutions have become so common that it is now regarded as a 'cost of doing business' more than a stain on one's reputation. edit: the comment I responded to has been edited, and I have not yet had time to review the new citations

wpietri 12y ago
I'd suggest you read Bair's "Bull by the Horns". Bair, a Bush-appointed Republican who ran the FDIC during the 2008 crisis, made it pretty clear that regulation had become ineffective in a number of important ways. The last chapter is a call for significant strengthening of US financial regulation. I'd say the "cost of doing business" thing cuts against your argument, though. I read that as the regulations (or the regulators) not being strong enough to keep bad actors in check.
- nickff 12y ago
  You may very well be correct, but I read the 'cost of doing business' story as meaning that everyone is constantly getting prosecuted, and there is no way of escaping it, so you might as well just pay out the fine, and raise you prices, as all your competitors do. It doesn't really matter that you have to pay the fines if everyone else in your industry has to do the same, because it is not a competitive disadvantage.
nl 12y ago
The SEC prosecution thing is interesting. My view is that if businesses are viewing prosecution as merely a 'cost of doing business' then it is really evidence they are pretty ineffective as both an enforcement measure and a disincentive to breaking the rules. (To make it clear, I'm not anti-market at all! I just think an effective and efficient market relies on the rule of law to function correctly)

by nickff 12y ago

wpietri 12y ago

I'd suggest you read Bair's "Bull by the Horns". Bair, a Bush-appointed Republican who ran the FDIC during the 2008 crisis, made it pretty clear that regulation had become ineffective in a number of important ways. The last chapter is a call for significant strengthening of US financial regulation. I'd say the "cost of doing business" thing cuts against your argument, though. I read that as the regulations (or the regulators) not being strong enough to keep bad actors in check.

nickff 12y ago
You may very well be correct, but I read the 'cost of doing business' story as meaning that everyone is constantly getting prosecuted, and there is no way of escaping it, so you might as well just pay out the fine, and raise you prices, as all your competitors do. It doesn't really matter that you have to pay the fines if everyone else in your industry has to do the same, because it is not a competitive disadvantage.

nl 12y ago

The SEC prosecution thing is interesting. My view is that if businesses are viewing prosecution as merely a 'cost of doing business' then it is really evidence they are pretty ineffective as both an enforcement measure and a disincentive to breaking the rules. (To make it clear, I'm not anti-market at all! I just think an effective and efficient market relies on the rule of law to function correctly)