Ignoring the laws that are supposed to mandate its actions, the SEC has perverted its mission from protecting investors to protecting Corporate America, incumbent management and financial giants. The latest is the attack on ESG (environmental, social and governance issues), a bete noire for corporate suites, the Chamber of Commerce and other industry trade groups. It is now being driven by SEC Commissioner Pierce, who derisively referred to ESG as “enabling stakeholder graft.” The SEC is reportedly targeting ESG with both examinations and enforcement, draining valuable resources away from focusing on real fraud and misconduct throughout corporate America and the financial markets.
This is, unfortunately, part of a pattern with this SEC. For example, it comes on top of the SEC’s fraudulent, misleading and mis-labeled “Regulation Best Interest” adopted earlier this year, which pretends to be a fiduciary duty rule requiring brokers to put their clients’ best interest first yet has no such actual duty. It’s an anti-investor fraud.
This pattern of dereliction of duty by the SEC continues literally through today when it met and proposed a series of actions that can only be described as delivering early anti-investor holiday presents to Wall Street and buckets of coal to Main Street. Hard to believe just 11 years after the last catastrophic financial crash, the SEC is proposing to gut its own rules on dangerous, high risk collateralized-debt obligations (CDOs), derivatives and swaps, which were at the core of causing and spreading the last crash. That’s why Warren Buffet said, “derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.” That’s not all the SEC did today: it also assaulted the foundational “accredited investor” rule that has protected retirees and financially less sophisticated Americans against high risk, hard-to-understand financial products and the many unscrupulous financial “professionals” who peddle these products. You can read more about these anti-investor actions here and here.