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The Trump SEC massively failed investors in 2020 under guise of 'streamlining' and 'harmonization,' according to SEC's own scathing report published today

The federal regulator did Wall Street's bidding and lost its compass, according to a damning Securities and Exchange Commission document.

Wednesday, December 30, 2020 – 2:07 AM by Brooke Southall
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Rick Fleming: 'While these typically were characterized as efforts to “modernize” or “streamline” regulations, they often had the effect of diminishing investor protections.'

The federal agency responsible for acting as a watchdog over stock markets allowed market manipulators and stonewalling corporations tremendous leeway to abuse their faith and their cash to their own ends then couch it as advancement.

Barbara Roper: The agency has strayed from its mission.

That damning conclusion was contained in a scathing self-examination of the Securities and Exchange Commission's (SEC) regulatory actions by Rick Fleming, the agency's Investor Advocate.

The Washington-based agency mostly removed rules designed to give investors a chance at having input and fair treatment amid the principals on Wall Street, Fleming charged in his report.

"The rulemaking agenda of the SEC was often disappointing for investor advocates this year," he writes. "As described in this report, the Commission engaged in numerous rulemakings of a deregulatory nature."

The SEC set back investor rules by skirting its own, Tweeted Barbara Roper, director of investor protection at the Consumer Federation of America.

"The report is an indictment, not just of the policies adopted by the SEC over the past year (though it is that), but of the procedural abuses evident in those rulemakings," she wrote. 

Orwellian embrace

Greasing the skids on this rulemaking finesse was the SEC's embrace of an Orwellian use of verbs to describe its actions, Fleming asserts.

Consumer advocate Barbara Roper called the report an 'indictment.'

"While these [changes] typically were characterized as efforts to 'modernize' or 'streamline' regulations, they often had the effect of diminishing investor protections. Meanwhile, several modernizations sought by investors were not addressed."

For example, the Commission did not prioritize repairs to the antiquated infrastructure of the proxy voting system, bypassed opportunities to make disclosures machine-readable.

It also failed to establish a coherent framework for the disclosure of environmental, social and governance (ESG) matters that could influence a company’s long-term performance, he says. 

The report suggests that an ethos of anything-goes -- under Orwell's "harmonization" --  is pervading the investment industry -- starting with the blurring of private and public markets.

"As a practical matter, a company can now raise as much money as it wants from as many people as it wants for as long as it wants, without ever having to go through the registration process," it reads.

"We view the 'harmonization' rulemaking, as described above, as a further step toward making registration entirely voluntary."

Watchdogs muzzled

Most chillingly, the report also cites concerns of the internal watchdogs that their own ability to critique the agency's inner working is on the wane -- making the likelihood of this sort of self-critique less likely in the future.

"We recommend legislative actions that would enhance the operational effectiveness of the Office of the Investor Advocate, including important steps to protect the integrity and independence of our research, and we encourage the implementation of grant programs to provide funding for efforts to protect investors," Fleming writes.

Fleming was named the SEC’s first Investor Advocate in February 2014 -- a somewhat belated reaction to the shredding of investors in the 2009 crash.

On the SEC website, it describes the Chinese wall erected to give its investor advocate full voice.

 “While the Investor Advocate reports to the Chair of the SEC, the position nonetheless involves a measure of independence. The Office was established pursuant to a Congressional mandate, and the law requires the Investor Advocate to submit reports directly to Congress, without any prior review or comment from the Commissioners or SEC staff.”

The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets and facilitate capital formation, according to its website.

To read the full report, click here






David Wilson

David Wilson

December 30, 2020 — 7:03 AM
Quite the hit piece. Almost comical. “Trump’s SEC has failed us.” We need more funding for staff, because we’re overworked , our recommendations regarding diversity and ESG were ignored., and we need to protect the investing public because advisors are crooks and the public is too ignorant to recognize it. The 2009 crash requires a new department because people lost money. As if government failure didn’t cause the crash in the first place. I got through 20 pages of the 90+ page report , and could no longer tolerate the whining.
Jeff Spears

Jeff Spears

December 30, 2020 — 1:44 PM
Our established checks and balances system works. We need to realize this and minimize the power of lobbying. This administration has given the established companies too much power. Our other problem is complacency. Just because the market has risen doesn’t mean all is good. We might dislike regulators but we need them as a balance to our animal spirits.


December 31, 2020 — 2:59 PM
to Mr Wilson, The Government didn't cause the crash. It allowed the circumstances to occur that caused the crash, though lack of regulation and lax enforcement of existing regulations. It was and is the lazze faire attitude of Republicans and conservatives, in general, that is the cause of financial crises. There is no such thing as a free market, and the reality is, the less regulated it becomes, the more out of control it gets until the next crash. In which case there are always calls for more regulation.


December 31, 2020 — 11:46 PM
Yep I had my account stolen from me and wasn't able to do a thing about it the system of halting markets have made them unfair in the fact of the stock can be raised in a second after unhalting in vast amounts I was in a stock that raised from 3 to 38 in one day had the hole time from 6 to 38 it would unhalt for a second be up 5 or more dollars and repeated this process till it killed me the whole time not being able to get out due to the halting I had all my money taken and left in debt because of this corrupt system they've put in place before that system stocks would go crazy sometimes still but at least you had the choice to close while it was moving up not being stuck in it till it reacts it's high of wherever they want

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