Grow the SEC

Yesterday’s Wall Street Journal bore a front page headline-”Political Pendulum Swings Toward Stricter Regulation.”  The article talked about how enforcement of current regulations failed to prevent everything from the sub-prime mortgage debacle to lead paint on toys.  While the Congress is in a regulatory mood, let’s hope they strengthen and grow the Securities and Exchange Commission.

There is not a smaller agency with a bigger job anywhere in government.  American investors are facing a tidal wave of investment fraud that has already begun to break over the first line of baby boomers who entered retirement this year.  With a hardworking, smart, and motivated staff of examiners and enforcement attorneys and accountants, the SEC does a terrific job of bringing the perpetrators of investment fraud to justice.  Too often, though, the SEC does not find out about a scam until many hundreds of victims have lost many millions of dollars that can never be recovered. 

With a bigger examination staff, the SEC could visit more brokers-dealers and investment advisers more frequently and uncover evidence of these scams before the perpetrators have spent the last penny.  With a bigger enforcement and trial staff, the SEC could bring more emergency actions to shut down these scams and freeze assets for ultimate return to defrauded investors. 

Even with a bigger SEC, though, baby boomers and seniors must take precautions against losing their nest eggs to negligent, reckless, or intention misconduct.  Private investor protection is not only essential to protecting individuals, but can be a powerful tool for bringing investment scams to the attention of the SEC or state regulators before they would otherwise learn of them.

Investors will either take reasonable precautions or regret it later. 

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