The SEC, the nation's financial guard dog, promised to change and revamp after it almost brought the country to its knees by failing to prevent the financial crisis of 2008 and detect the Madoff $50 billion fraud. It is pretty clear that nothing has changed at the agency.
Whistleblower Darcy Flynn recently revealed that the agency has been breaking National Archive rules by destroying documents, which should have been kept for 25 years. He was treated with hostility by the SEC's enforcement staff for making this revelation instead of being hailed as a hero. The destruction of documents hinders investigations into wrongdoing.
The current SEC enforcement director Robert Khuzami, who was compliance director at Deutsche Bank, is not cooperating with lawmakers that are checking into possibly fraudulent activity. He recently thumbed his nose at Senator Grassley, who is investigation one of the world's largest hedge funds, by issuing a terse letter saying that the SEC does not comment on current investigations.
Many people blame the SEC's lack of fight for the consumer on the revolving door between Wall Street and the SEC. To eliminate that source of ineffectiveness, I suggest that we outsource the work of the SEC to the private sector. There are plenty of hungry lawyers out there.
My article will investigate the possibility of outsourcing the SEC's work to private lawyers. I plan to consult with SEC staff, private lawyers that specialize in securities work, employees in the financial industry, and academics.
