As ShoutBits reported nine months ago, some Congressmen want to unleash an unaccountable tyrant on investors in the form an autonomous SEC. Today the New York Times has reported that, surprise, a bunch of trial lawyers are pushing this idea as hard as they can. This bill must not become law if the US is to continue to be the place where people raise capital and grow commerce.
The lawyers argue that SEC is under the capricious power of Congress to set its budget, and therefore it cannot perform its duties. If the SEC were to self-fund with the fines and fees it collects, it would better police the financial markets, implying that Congress is corrupt and too cozy with Wall Street. As officers of the law, these lawyers should know that it is Congress’s Constitutional duty to decide how public money is spent and that creating unaccountable bulldogs is not legal.
Why do a bunch of securities lawyers want the new law, and why is the NYT blog sympathizing with them? A renegade SEC that sues everyone in sight to pay its bills is the perfect partner for trial lawyers. These trial lawyers would end up doing much of the SECs work – researching and suing every security broker that makes even the slightest mistake – and earning big fees for doing so. With the SEC incented to prosecute every minor case that now is settled through cooperation, trial lawyer’s billable hours will skyrocket.
Lawyers corrupting the Federal Government to weasel more damages from business? That is business as usual. After all, Obamacare does nothing to reign in frivolous lawsuits, not even one page out of 2,600. Sarbanes-Oxley did nothing to prevent the destructive excesses of Fannie Mae, but it created a legion of new lawyers and CPAs devoted to the new regulations. Nearly every new law is an employment bill for the trial lawyers who own the Democratic Party, and Sen. Schumer’s autonomous SEC bill is no different.
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