I indicated to my good friend and partner in the trenches, Mary, that the fundamental problem for many was one that could best be described as a lack of clarity about what it is that the SEC actually does.
My conclusion is the SEC is a PR agency for Wall Street, chartered with sending the message that the markets are regulated, and patrolled, and that it's safe to get in the water. Not since Jaws has an official been more transparently dishonest or self-interested. There is no rule of law if you have juice, or are one of the big banks - ever since the first commissioner was named, and an ex-manipulator, ex-bootlegger entrusted with keeping the markets safe, the SEC has been all about pretense ("do something, otherwise the peasants will rise up and revolt!" could have been the Wall Street response to the outrage and outcry to the revelations from the Pecora hearings). Enforcement actions are carried out against small fry, or against potential up and coming competitors, or used as a hammer against targeted issuers. Rules are made to be broken, with wrist-slaps the consequences, and the 1934 Act is a nuisance the commission has been eager to dismantle or render toothless - I mean, it's not as though anyone actually intended to do any of the things mandated in the Act, is it? Please.
Once one understands that there is no regulation to speak of, and that the SEC is a dolled up streetwalker trying to hawk obviously tired and tattered goods, then all the action becomes comprehensible.
No wonder there was a grandfather exemption. No wonder everyone on the planet can see how the MM exemption harms everyone but the MMs, but the SEC requires years of study while billions are stolen from the market. That's how it is supposed to work. That's the game.
To their credit, both Patrick and Dave have drafted compelling, articulate, and damning letters calling for the abolishment of this unlawful (if the 1934 Act is considered anything but ass-wipe these days by the SEC) exemption.
Particularly telling is Patrick's observation about Citadel, and how the exemption is unnecessary as they have come up with ways to comply with the existing rules without reliance on this exemption. Whether that is true or not doesn't matter, and is untestable. It is however the final nail in the coffin for this exemption.
So in the future, just understand that the SEC isn't in place to do anything to the bigwigs actually running the big scams. The Commission is there to pick on dangerous competitors who could grow to compete with those bigwigs (a la Milken), and to make a lot of fuss about meaningless things so it seems to be doing its job. It's actual job is to convince the rubes that the cop isn't gin drunk, and asleep at the wheel of his cruiser. No, he is a hawk-eyed vigilante, carefully surveying the market for signs of foul play. Laughable, when one considers the thousands of letters about naked short selling the SEC has received. Equally laughable when one considers that 60% of large M&A activity was front-run this year. Or that Patrick's company has been on SHO for year after year after year.
Hmmmmm. If only there was a sign.....