PointofLaw.com
 Subscribe Subscribe   Find us on Twitter Follow POL on Twitter  
   
 
   

 

 

Regulators on the Beat

| No Comments


Mark Cuban and his attorney wrote a piece in the Wall Street Journal today that is worth reading. Cuban successfully beat back insider trading charges by the Securities and Exchange Commission. To do so, he took the relatively unusual step of going to trial instead of settling with the SEC. Defending oneself against an SEC enforcement action is costly financially, but can also take a toll on one's mental and physical health, family life, and career. For that reason, many people choose--regardless of the validity of the SEC's allegations--simply to settle and move on with life as best they can. Cuban maintains that the SEC should operate under a rule currently applicable in the criminal context that requires the government to turn over to the defense material exculpatory evidence. Cuban's commentary raises broader questions about regulatory agencies' enforcement programs.

The SEC is a regulatory agency without criminal authority, but is fond of portraying itself as a law enforcement agency. Its current chairman, a tough former criminal prosecutor, lamented in a recent speech that the agency lacks the power to arrest and imprison. The SEC is not alone in blurring the line between civil and criminal enforcement. The Bureau of Consumer Financial Protection assures us that it is the "cop on the beat to patrol the consumer financial services markets." The Commodity Futures Trading Commission's acting chairman testified recently that the regulator's enforcement lawyers are "cops on the beat" in the swaps and futures markets. Regulatory agencies are obligated to enforce the laws they administer, but they are not prosecutors. If these agencies insist on modelling themselves after criminal prosecutors, then Cuban is right that the people they pursue need the same protections afforded to criminal defendants. Alternatively, regulatory agencies could remind themselves--as SEC Commissioner Daniel Gallagher recently did for the SEC--that the SEC's enforcement division is not an arm of the Department of Justice. Enforcement attorneys at agencies like the SEC, the CFPB, and the CFTC, need to put away their dreams of guns and badges and concentrate on bringing legally and factually sound enforcement actions that support the regulatory mission.

Leave a comment

Once submitted, the comment will first be reviewed by our editors and is not guaranteed to be published. Point of Law editors reserve the right to edit, delete, move, or mark as spam any and all comments. They also have the right to block access to any one or group from commenting or from the entire blog. A comment which does not add to the conversation, runs of on an inappropriate tangent, or kills the conversation may be edited, moved, or deleted.

The views and opinions of those providing comments are those of the author of the comment alone, and even if allowed onto the site do not reflect the opinions of Point of Law bloggers or the Manhattan Institute for Policy Research or any employee thereof. Comments submitted to Point of Law are the sole responsibility of their authors, and the author will take full responsibility for the comment, including any asserted liability for defamation or any other cause of action, and neither the Manhattan Institute nor its insurance carriers will assume responsibility for the comment merely because the Institute has provided the forum for its posting.

Related Entries:

 

 


Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.