Wall Street's Top Cop Doesn't Accept a New Beat

Article excerpt

Nearly everyone knows what the federal Securities and Exchange Commission does. Last week, however, a few people lost sight of one of the key roles for the SEC.

Led by an appointee of President Bush, Christopher Cox, the 73- year old SEC is the independent agency that oversees the U.S. securities markets. It simplistically might be thought of as Wall Street's top cop. The average person only notices the SEC when there is a high-profile securities case, such as Enron or Worldcom. Last week, however, the SEC was in the limelight for a significantly wrong reason.

Some members of Congress last week attempted to morph the SEC's role into something it is not by asking the agency to stall an initial public offering. Correctly, the agency did nothing. It has done nothing since. In the SEC's opinion, the company involved had complied with all the applicable securities laws, and therefore the agency had no authority to stop or delay the offering.

This debate prompted retired SEC Chief Harvey Pitt to characterize, in a television interview, a congressional attempt to stall the public offering as potentially a "disastrous precedent."

The SEC began as a logical alternative to confusing and inconsistent state regulations known as Blue Laws that clearly were unable to regulate the rapid expansion of securities trading leading up to the Great Depression. The Securities Exchange Act of 1934, one of the most significant securities regulation passed in this country, provided the framework for an agency to assume control of security transactions nationwide. The SEC largely is responsible for administering the provisions of the 1934 act, as well as five other major securities laws.

From an everyday standpoint, the SEC has the monumental task of assuring that the tens of thousands of corporate filings mandated by the six major securities laws meet regulatory requirements. The agency's watchdog role includes interfacing with other federal agencies whenever an enforcement action is required.

Although how the SEC enforces relevant laws in some peoples' eyes might put it in a quasi-legislative role, it is important to note that the SEC administers the securities laws. …