[hardwaresofton]

Why is the SEC so fast to target initial coin offerings but terrible at actually reining in the financial sector. To be fair I don't know a ton about the inner workings of the street, so maybe I've just consumed one too many movies/articles/whatever but it seems like the SEC is a just handing out slaps on the wrist over there.

[nostrademons]

Legit financial companies are very careful about following regulations to a T, and only fuck over investors in ways where they are unlikely to get caught or where they have institutional sanction.

The fly-by-night ICO market has the difficulties of both trying to defraud investors and sucking at it. Successfully fucking over the general public usually requires building an institutional apparatus around you to confer legitimacy - you can't just take the money and run without expecting some form of sanction.

[omarchowdhury]

You don't know the inner workings of the street, so why do you think it's fair for you to say the SEC is doing a terrible job reining in the financial sector?

[hardwaresofton]

Because things like the financial crisis of 2008 happened? Because as far as I know the SEC hasn't introduced any sort of uniform fiduciary standard for financial advisors? While I don't know the inner workings of the street, everything I see seems to point to the SEC not doing enough to penalized well-established players, and is allowing a culture in which firms do their best to not get cauhgt/apologize for transgressions rather than follow the law. Maybe it's just that my news sources are biased, but I try and vary them and pick generally considered good publications (when it's written form at least).

It seems objectively difficult to find anyone that's going to say the SEC is doing a great job at reining in the financial sector -- so my question stands, why are they doing such a good job at reining in ICOs, using tech that's barely understood by the general populace (though it's probably easy to spot how scummy they are), and in an absolutely new regulatory landscape?

[omarchowdhury]

Can you accurately and properly trace the blame for the financial crisis of 2008 onto the failings of the SEC?

[nikcub]

Three recent and well known high-profile failures at the SEC and books or articles covering them:

0. Enron - Senate committee concludes Enron was enabled by a systemic and catastrophic failure at the SEC[0]. Smartest Guys in the Room[1] is one of the better books about it

1. No One Would Listen - book from Madoff whistleblower Harry Markopolos[2]. He spent years laying out the entire Madoff case for the SEC yet their investigators kept signing off on Madoff. He has a lot of good detail on why the SEC are a bad regulator.

2. Financial Crisis - SEC chairman concedes the oversight program was fatally flawed in monitoring Bear Sterns and other hedge funds[3] - plenty of books on crisis, "After the Music Stopped" was good[4]

[0] https://www.wsj.com/articles/SB1033944629262271233

[1] https://www.amazon.com/Smartest-Guys-Room-Amazing-Scandalous...

[2] https://www.amazon.com/No-One-Would-Listen-Financial/dp/0470...

[3] http://www.nytimes.com/2008/09/27/business/27sec.html?mcubz=...

[4] https://www.amazon.com/After-Music-Stopped-Financial-Respons...

[hardwaresofton]

Can you accurately and properly trace the blame for any large scale malfunction of society on one small bureaucratic group?

Even if you pin the blame on bad actors that took control of ratings bodies and propogated bad CDOs, are you suggesting that the SEC was blameless? Would you not say it's within the purview of the SEC to manage/monitor/influence CDO product selling/purchasing?

[dogruck]

History demonstrates that government regulations have never prevented every financial crisis.

[lowpro]

That's because if they did you wouldn't know it. If a certain regulation prevented a certain action that would have caused a recession, you would never know it helped.

[dogruck]

I hear you, but I don't think it's relevant to OP.

I'm not arguing that some regulations aren't beneficial. Only pointing out that it's tough to argue, using history, "we had a crash because not enough regulation!!!"

[Naga]

There is a good book on this subject that just came out: The Chickenshit Club by Jesse Eisinger (https://www.amazon.ca/Chickenshit-Club-Department-Prosecute-...). It's about the culture inside the SEC and Justice Department and their motivations over the last thirty or so years.

[thisisit]

Fast? How do you figure?

I never understand this kind of logic. So if x agency is bad at following through some it's stated objectives in some cases, it shouldn't even attempt at trying to complete it's objective in other cases too?

[hardwaresofton]

ICOs JUST started popping up -- is it not anomalous that they are reacting so quickly? The problems underscoring the 2008 financial collapse were in place for years before anyone did anything about it (and CDOs are basically back BTW).

I'm not saying the SEC must always move at the same speed on all issues, but it is anomalous that they are moving this fast on this relatively new thing.

[JumpCrisscross]

> is it not anomalous that they are reacting so quickly

One factor that flipped me, personally, from bemused curiosity to thinking this needed enforcement is the tone ICO backers and supporters take to the law.

I have had conversations with ICO sponsors and investors where cavalier disdain was shown for securities regulations, its history or the SEC; where tax evasion was treated casually; and the where most defenses boiled down to whataboutism [1].

Pioneering is one thing. Being blatantly blind to the history of our capital markets is another. Involving retail investors in that willful ignorance should merit prosecution.

[1] https://en.wikipedia.org/wiki/Whataboutism

[CryptoPunk]

So essentially your support for punitive measures is politically and ideologically motivated.

>>Involving retail investors in that willful ignorance should merit prosecution.

Making the litmus test for whether someone should be prosecuted your personal evaluation of the ignorance of their political views is pretty far from any semblance of justice.

[JumpCrisscross]

If someone is walking into a dangerous swamp, and you offer them a map, and they say "fuck your map" and then perish in a marked peril, I think it's okay to have limited sympathy. The peril isn't more likely to spring because they chose to be ignorant. They're just more likely to blunder because of it.

The SEC's tendency to go ballistic when retail, i.e. unaccredited investors, are harmed is common industry knowledge. This common knowledge was ignored. The ignorance isn't a reason for prosecution. But it increases the chances that prosecutable mistakes will be made.

Securities law is too complicated to blunder through mindlessly. When I saw how many promoters and investors were doing just that, it was natural to conclude they would, relatively quickly, break important laws and conventions. They have, and the regulators are pissed just as they would be with anyone else making the same mistake.

[ringaroundthetx]

> I have had conversations with ICO sponsors and investors where cavalier disdain was shown for securities regulations, its history or the SEC; where tax evasion was treated casually;

Many are like that, of that many some of them have obtained good lawyers which will advise the business practice properly but not change the opinions of the founders so you wouldn't be able to tell the difference but they may be compliant.

[thisisit]

Anomaly? How do you figure? With 100s of upcoming ICO, action against two is considered to be an anomaly?

Still I am not following your logic here. If this is fast, when do you figure SEC should have taken action? They should have let ICOs defraud people for years because they allowed it during the 2008 crisis before taking action? Two wrongs doesn't make one right.

Do look at my other post. These coins opened themselves to this action.

Additionally, I am sure if one was to dig enough you will find SEC had taken against some of the outright frauds, like these coins, even during the CDO phase.

[gnaritas]

ICO crooks are amateurs, they're easier to catch so things appear to move faster. The Wall Street crooks play at a higher level, take advantage of loopholes in the laws they used their money to have installed. They find or make legal ways to rip people off.

[PeterisP]

ICOs and the way they're offered to the public have strong parallels with all kinds of historical "investment" products and scams that the SEC has already seen and tackled. In that sense, the scammier ICOs are nothing new, they're a new name/cover/veil/buzzword for a common and classic fraud pattern (sell a share in a product that will make you rich, take the money and run), such fads come periodically every now and then, and SEC has had a lot of practice and quickly identifying and shutting down new fads doing the same thing in a slightly different manner.

I don't feel that this is anomalous, this is SEC-as-expected, as they should be doing. If anything "sit out and wait how this new thing works out" would be a major failure of SEC; it's the job of courts and police to punish fraud after it happens, but it's the job of SEC to prevent or restrict fraudulent general reaching public in the first place, it's their duty and law-given mandate to be proactive in shutting potentially shady things down before they've scammed a lot of people.

[justinzollars]

Read The Creature of Jekyll Island.

[arca_vorago]

I've been through Creature a few times but I can hardly remember a reference to the SEC. Of course if you are trying to make the point that it was a systematic move to control all mechanisms around banking, and by extension the SEC would be toothless from the start, then you need to say it and back it up instead of just telling someone to read a pretty obtuse volume. It's a good read about the fed and the international banking cabal in general but I don't think it's specific enough for talk of the SEC.

That said, I find it very interesting that JFK's father Joseph P. Kennedy was the first one in charge of "cleaning up wallstreet" via the SEC, but all the indicators show it was much more about going after the mid-level and low-hanging fruit on wallstreet in order to assuage the publics view of the markets (remember the 29 crash was in recent memory as SEC was formed in 34).

Please, us conspiracy theorists have a hard enough time on the internet, if you are on HN please take the time to put in some effort (one of the things that makes HN consistently better for discussion than other forums), otherwise you are just making it harder on us to reach others.

[joosters]

What do people who post these minimal ‘read this’ comments think people will do? Run out and read the book on a whim? If it’s good, at least say why you might think it’s relevant.