- Associate Director, Division of Enforcement
- Chief Counsel, Division of Enforcement
- Associate Director – Office of Whistleblower Coordinator
I’m very happy to do this for several reasons:
- The SEC sets and enforces the standards for transparency and fair dealing.
- Tough enforcement of securities laws restrains predation on weaker parties in financial markets.
- Market participants will reduce excessive risk-taking if they know they are faced with civil sanctions (and possible referral for criminal prosecutions).
- Well regulated financial markets are stable markets.
The heart of capitalism is well functioning markets.
Fair functioning markets efficiently move resources from savers to makers. This transformation creates the basis of wealth and growth for the nation.
Our nation is emerging from a period of under-regulated markets.
We lived with the belief that markets were efficient and the deeply mistaken understanding of Alan Greenspan that regulation was unnecessary because market participants were always assessing the creditworthiness of their counterparties. This is a direct manifestation of “self-regulating” markets.
Self-regulating and efficient markets are more likely to happen when they are transparent.
Transparent markets can be less profitable markets. Profits are often highest in opaque and fraudulent markets.
Transparency levels the playing field, increases competition, exposes fraud, reduces margins and increases the supply of goods and services.
Wrongdoing occurs in firms of all sizes.
Small time lawbreakers are generally caught with ease over time… their tricks are not novel or obscure…
It’s the largest firms, with the most resources, who egregiously create complexity in their accounting and disclosure that pose the greatest threat to capitalism. The concentration of resources and obscurity of business practices make these the most difficult firms to regulate.
The financial crisis has highlighted that our largest firms were poorly run and engaged in activities that reduced transparency… think Lehman repo 105, Goldman Sachs Abacus CDO deals and Merrill Lynch’s lack of disclosure pre-merger with Bank of America … all massive, highly engineered attempts to circumvent the laws…
Regulating the transparency of these firms will require sophisticated knowledge of market practices, accounting rules and the law.
The positions that the SEC is seeking to fill are the “scalptakers of capitalism”… the men and women who fill these roles will be the enforcers of the fundamental tenants of free functioning markets.
One used to often hear how the United States had the most transparent and trusted markets in the world.
I’ve not heard that phrase used since the crisis began in 2007. Let these scalptakers restore this homage to our nation… this free and open nation…