Ron Paul Introduces SEC Transparency Act

The Securities and Exchange Commission (SEC) whose purpose is to regulate the stock market and prevent corporate abuses has become no stranger to controversy. Recently, a Politico article revealed that top officials at the SEC spent a significant part of their day watching pornography on the taxpayer’s dime. Yet, the SEC pornography scandal resulted in zero firings. The former SEC chief admits that the commission failed to act when they received “credible and specific allegations” regarding the Bernie Madoff’s Ponzi scheme. Cato Institute scholar Richard Rahn asserts that the existence of the SEC has made us less safe from financial fraud:

The budget for the Securities and Exchange Commission (SEC) grew tenfold (to more than $1 billion) in the past 25 years, but there is no evidence it has made us any safer from financial fraud. In fact, the opposite seems to be the case. The Madoff Ponzi scheme was the biggest financial fraud ever. Yet when knowledgeable people presented evidence of the Madoff scheme to the SEC, they were just blown off. Now the SEC wants a bigger budget as a reward for its failure, and the agency and members of Congress are demanding more power for the SEC. The United States has many laws against financial fraud, so that is not the problem. The problem may be - in addition to SEC incompetence - that the public assumes the SEC is looking out for it and consequently fails to do proper due diligence. In other words, the existence of the SEC may be increasing rather than diminishing risk.

Upon the passage of the Dodd-Frank Financial Regulation bill, President Obama claimed “it will finally bring transparency to the kind of complex and risky transactions that helped trigger the financial crisis.”