Has the Securities and Exchange Commission (SEC) Changed??

Jesse Westbrook of Bloomberg has a very informative report on the "new" SEC and it's leader Mary Schapiro. The SEC has lost major face after the Madoff scandal, and even an audio tape of Madoff basically saying what oafs the agency's regulators were.

One festering issue in Westbrook's story is surprise inspections by the SEC of money managers. Initially, back in May, Schapiro put forward a plan to surprise inspect 10,000 money managers to insure they weren't swindling the customers who entrusted them with their money. From May to December 16 that original idea of 10,000 surprise inspections had slowly and magically dwindled down to a rule by the SEC that only 1,600 U.S. money managers would submit to mandatory, unannounced audits---as Westbrook's article says:

"83% fewer than 7 months ago. The revision came after lobbying by fund companies, including executives from T. Rowe Price Group Inc., who met with Schapiro, and Legg Mason Inc., who met with another commissioner, SEC records show."

"The revision" is such a nice way to phrase that, eh?? If I had my money entrusted with T. Rowe Price Group Inc. or Legg Mason Inc. I would be curious why they felt the "revision" was so important?? That rule, is one of at least 4 that Schapiro has announced and then backed down from. Last October Schapiro postponed plans to give more power to investors to decide who gets membership on corporate boards after being rebuffed by the U.S. Chamber of Commerce (An organization Professor Simon Johnson of MIT has been known to mention from time to time, namely here and here).

Schapiro is quoted in Westbrook's report from a Dec. 22 interview, "We just don't have the capacity to move any faster. We're still at it, I think, a very good pace."

The SEC was publicly shamed last September, when after proposing a $33 million dollar settlement with Bank of America in an enforcement case, the federal judge tagged it a "contrivance", a breach of "justice and morality", and ordered the case to trial.

There is much other heavy lifting the SEC has to do with credit rating agencies, derivatives, limiting short-selling, and new rules for money market funds (as discussed in further detail in the Bloomberg piece by Jesse Westbrook ). You can place your wagers now on the odds of that getting accomplished without more resources and manpower being given to the SEC by systemically threatening banks' friends in Congress.