What is the SEC? - 2

Lets try first to look and pinpoint more closely to the problem here. Most of the failure to fight back fraud related to the stock market is the result of lack of honesty and integrity in the SEC. It is not the result of lack of sufficient sophistication. This is not a complicated science where you may have a scientist with depth of knowledge irreplaceable by whatever number of others who haven't yet reached that level of knowledge. Except for things like insider tradings, most of the fraud in the market is even easy to be seen and caught provided that there is a real intention to do that. Take even a major case like that of Madoff's. Even though I did not dig deep into the details of the case, I still wonder how much more is required beside an honest intention to check to see whether trades , Madoff's or any other, were real or fake? How would you check fake trades? Using common sense similar to that applied in checking any other claims of buying and selling through tracing the claimed transactions?How could someone with honest intention fail in such a task?The SEC received a tip on Madoff's fraud and investigated things without finding any problem. Actually there is too much fraud and manipulation in the market that requires nothing more than being seen.

The point is that for much, and probably most, of the fraud and manipulation in the market you do not need specialization beyond common sense intelligence to find it. What you need, instead, is honesty and having a real intention to investigate things. That honesty and integrity would need to be sufficient to stand the strength of the corruption power from those with the financial power and malicious intentions. One way to help achieving that is to make a good use from that fact through expanding the authority of investigating these things as widely as possible so that those with the corruption power would not be able to infiltrate and hijack all that expanded domain or predict who will be investigating them or even how many separate investigations by those various entities with that authority. This is how you fight corruption from the like of those with huge corruption power involved with the stock market rather than the ways of the thirties which probably have became far from being sufficient a long time ago. Your cute and fancy SEC is nothing more than a concentration point for the corruption power of the like of this hedge fund guy.

In addition, this is suitable to be the first level to fighting corruption related to fraud in the market anyway even when a higher degree of sophistication and specialization is required. That is because if you cant deal with things that are clear enough to require only an honest intention to be investigated, how can you trust that sophistication and specialization?

[(added 1/18/2014) Although there maybe a huge amount of smoke surrounding the SEC regarding Madoff's case and that I am far from believing that it really did not know about the scam, my suggestion above that simple tracing of Madoff's trades should have revealed them being fake failed to take into account that ,as it seems, the SEC has no authority to force revealing the data needed to achieve that tracing of trades. Yes, one may still argue that there were enough suspicious things for someone interested to do a real investigation to empower obtaining a court order from an incorrupt court for revealing that information with ease but that is still not as direct as I meant.]

[ (Added 1/19/2014) Then ,again, thanks to this wonderful writing by Elaine Lindenmayer and Richard M. Phillips http://apps.americanbar.org/buslaw/newsletter/0065/materials/book.pdf
it seems that my earlier assumption was more probably correct than wrong]