Former SEC Commissioner Nazareth Says The US Not Keeping Up with Evolving Investment Markets

Former Securities and Exchange Commissioner Annette Nazareth says that those in charge of overseeing the US financial markets are years behind when it comes to “rethinking regulation” and modernizing the structure required to keep up with the changing investment markets. Nazareth voiced her concerns to the US Chamber of Commerce during a forum about financial regulation last month and talked about how US regulation was lacking compared to other “respectable jurisdictions with robust economies that have rethought regulation.”

Recently, the US Treasury Department recommended the merging of the Securities and Exchange Commission and the Commodity Futures Trading Commission as part of a “blueprint” to restructure financial regulation. Nazareth did not directly endorse this recommendation, but she did talk about how a lot of existing regulation either leaves gaps or is redundant.

Nazareth also noted that while Sarbanes-Oxley imposed “burdensome” regulations, Congress has deregulated the futures markets. She said that there is a lot of business that exists on the cusps of securities and futures and that major issues that are key to the economy are not being systematically tackled.

The former SEC commissioner called for a return to “first principles,” including a renewed focus on the issues of who should regulate, why regulation is necessary, and who the regulations there to protect. She suggested that policy makers forego ego concerns and focus on what is good for the economy and for the markets.

Another former SEC Chairman, Harvey Pitt, was also part of the panel. He criticized the current focus on enforcement and regulation, which he says appears to blame and punish more than focus on what will help the capital markets work better. He also recommended that regulated entities work together with their regulator to ensure that everyone is aware of expectations and how to meet them.

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Treasury Recommends SEC, CFTC Merge, CCH Wallstreet, April 7, 2008

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