SEC Doesn't Deserve to Exist: Gary Weiss

So let's see if we can find a common thread in a couple of news items that have wafted over from the Securities and Exchange Commission.

The first was a dilly. The ink is still wet on the SEC lawsuit against Goldman Sachs (GS) -- you know, the one alleging offenses so grave that prosecutors are said to be interested -- and already it seems destined for the round file. There are persistent reports that the bank is in settlement talks with the SEC. Got to put that bad stuff behind 'em and keep on giving clients great service. Got to resuscitate that share price. Got to... wait a moment. What about the rest of us? Doesn't the public deserve a full airing of the charges, along with a determination if they are true or false? That doesn't happen in SEC "neither admit nor deny" settlements.

Then there's that crash-uncrash spasm in the markets the other day. Rumors whirled that it was caused by one guy pushing the wrong button. It was nuts. The House Financial Services committee hurriedly convened a hearing to find out what happened, and called the one person in the world one logically assumes would be on top of the situation, SEC chairperson Mary Schapiro.

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Think again. "Ultimately, we may learn that the extraordinary disruption in trading, however it may have been triggered, was the result of a confluence of events which, taken together. . ." she said (let's pause for breath now and continue) ". . . exacerbated what already had been a down day and led to an extraordinarily steep price drop and recovery. However, we are not prepared at this time to draw that conclusion."

Maybe Ms. Schapiro isn't prepared to draw a conclusion at this time, but I am. I've concluded that in a whole range of things that we're witnessing in the markets nowadays, the SEC is more than just negligent, more than just out to lunch, but just simply inept. It's becoming glaringly obvious that the problem with the SEC is not lack of resources, or poor organization, or ideological undermining from the top -- beginning with Ronald Reagan's SEC chairman John S.R. Shad, and continuing under Harvey Pitt and Chris Cox -- but a simple lack of competence that doesn't seem to be abating.

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