Has the Dodd-Frank Wall Street Reform and Consumer Protection
Act of 2010 really succeeded? How much has really changed over the
past three years?
Here's a short checklist of what it's done so far:
1) It still hasn't outlawed banks (NYSEARCA:KBE) that are too
big to fail.
2) We still have loopholes in insider trading laws for members
of Congress (via political intelligence and consulting bribes).
3) We still have national stock exchanges (NYSE:NYX) sharing
information with high frequency traders (HFT) and
anyone that will pay them a data fee. It's called legalized front
4) It still hasn't stopped new and even more liberal
rules from being passed. For example, hedge funds
will now be permitted to market their themselves to Main
Street investors. It can't be long before we see
advertisements for convertible arbitrage funds in Bon
Apptit and People Magazine! Here's another example of lax
regulation: The SEC is now clearing the way for the promotion of
unregistered stock offerings
5) The top brass at the SEC and other financial regulatory
bodies are so closely tied to Wall Street and the institutions they
regulate, their personal biases and business alliances consistently
conflict with their responsibility to protect the public. As a
result, regulators are rendered impotent.
The ongoing public debate about the broker/advisor fiduciary
standard is further proof that Dodd-Frankenstein is still a)
too confusing and burdensome to be implemented, b) can't be
implemented, or c) all of the above.
In my book "
Gents with No Cents: A Closer Look at Wall Street,
its Customers, the Media, and Financial Regulators
" (HalfFull Publishing Group, 2011) I wrote:
"I know there's a growing populace that would like to abolish
the SEC and they have a point. No existence is better than an
ineffective existence - isn't it? I liken the SEC's existence to
the feathers on an ostrich. Do an ostrich's feathers help it to fly
better? Not really, but liken the SEC, the feathers are there for
decoration. Can you imagine what an already ugly beast would look
like without feathers?For the public good, I would like to see the
SEC simplify its charter and aim for more achievable milestones.
How about this one: We won't make things worse."
The enforcement of existing securities rules is a tough nut
that Dodd- Frankenstein still hasn't cracked. And the financial
services industry is still over-regulated and under-policed.
In the meantime, the best advice I can give people is to get
some basic financial education and be defensive with your
assets so you don't get scalped. And one more
important thing: Stop relying on securities regulators to
protect you from financial crackpots.
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