The U.S. Securities and Exchange Commission (SEC) Chief Says, Firing Incompetent Employees 'Would Harm The Agency’s Work.’ WOW! There You Have It! :/

"The U.S. Securities and Exchange Commission (frequently abbreviated SEC) is a federal agency which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets in the United States.

The SEC was established by the United States Congress in 1934 as an independent, quasi-judicial regulatory agency during the Great Depression that followed the Crash of 1929. The main reason for the creation of the SEC was to regulate the stock market and prevent corporate abuses relating to the offering and sale of securities and corporate reporting. The SEC was given the power to license and regulate stock exchanges, the companies whose securities traded on them, and the brokers and dealers who conducted the trading.

The enforcement authority given by Congress allows the SEC to bring civil enforcement actions against individuals or companies alleged to have committed accounting fraud, provided false information, or engaged in insider trading or other violations of the securities law. The SEC also works with criminal law enforcement agencies to prosecute individuals and companies alike for offenses which include a criminal violation." [source: wikipedia]

******************************************************************

CNS news

Firing Incompetent Employees 'Would Harm The Agency’s Work,’ SEC Chief Says

written by Mark A. Calabria

Tuesday November 15, 2011

Over a year ago I asked a fairly simple question, why can’t we fire failed regulators?

After all, lots of seemingly smart people had oversight of our financial markets, and regardless of whatever spin you might hear, our financial markets are, and have been, highly regulated.

Sadly, “highly” is not the same as “well.”

Perhaps no failure was as avoidable as that of the Bernie Madoff scheme. After all. outside parties basically put the case together and brought it to the Securities and Exchange Commission (SEC). Yet, the SEC did nothing until it was far too late.

Eventually the SEC’s human resources department and an outside law firm advised the agency on how to handle these regulatory failures.

Their recommendation: fire the manager responsible.

SEC Chair Mary Schapiro’s response? No, as such “would harm the agency’s work.”

I’d think having incompetent employees would harm the agency’s work. But then we have yet to hear what happened to the many SEC employees that spent the crisis watching porn instead of doing their job.

This is just another example, in a long list, of why relying on the relatively weak incentives of government regulatory oversight is inferior to relying on the strong incentives contained in market participants having their own wealth on the line. But, then, for such incentives to be effective, we need to end bailouts and have real market discipline.

Sadly we are currently stuck in the worst of both worlds: incompetent and unaccountable regulators coupled with a neutering of market discipline by these very same regulators.