On efficiency and regulation of the securities industry

An outsider reading the literature on SEC regulation is struck by the contrast between the amount of space devoted to the unresolved problems created by industry practices and the paucity of material dealing with problems crated by SEC practices. Even more striking, after 30 years of regulation, is the absence of discussion of the rationale for continuing present regulations or a review of the achievements or deficiencies of past regulations. While there is considerable discussion of current proposals to extend SEC regulation into new areas, little attention is paid to the problems that would be reduced if existing regulations were changed or eliminated. One of the few attempts to present some evidence of the effects of SEC regulation on the industry, 1 produced a reaction that seems excessive, to an outsider, considering the tentative nature of the evidence presented. Indeed, a major point of the respondents seems to be that no assessment of the SEC's achievements or deficiencies is required. It is sufficient, for them, that the law and the SEC have eliminated some of the practices that previously existed.