[rschneid]

I humbly submit to you hypothesis that the lawlessness of finance is so pervasive that it has effectively become legalized through intellectual and regulatory capture. If you're interested in supporting evidence for this idea, check out how Enron sought and acquired SEC 'approval' for their ponzi instruments....

[JumpCrisscross]

> the lawlessness of finance is so pervasive that it has effectively become legalized through intellectual and regulatory capture

Right, this is the popular narrative, and it’s why numpties think they can get away with trading out-of-the-money calls on tenders.

> check out how Enron sought and acquired SEC 'approval' for their ponzi instruments

Source? Because the SEC doesn’t approve (or deny) corporate instruments. It regulates disclosure.

[rschneid]

Well official disclosure in finance is very similar to assigning value, since many of the instruments that actually trade are derivative or abstract representations of actual assets with 'real' value.

My only point is that the notion of 'legal' can get very fuzzy when you're talking about an industry with so many private/self-interested entities that rival or exceed intellectual/manpower of the agencies responsible for regulation.

If you want to learn more about the SEC's role or dereliction of duty in the Enron case you could start here: https://www.investopedia.com/updates/enron-scandal-summary/#...

Google could lead you to more evidence, if you wish to explore the hypothesis further...

[JumpCrisscross]

> many of the instruments that actually trade are derivative or abstract representations of actual assets with 'real' value

They’re all derivative.

> the notion of 'legal' can get very fuzzy when you're talking about an industry with so many private/self-interested entities

Sure. You’re describing ambiguity outside securities trading.

> more about the SEC's role or dereliction of duty in the Enron case

I asked for one example of something the SEC had a mandate to do that it didn’t.

[rschneid]

The SEC has a three-part mission: to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.

These mandates are, of course, subjective and vague enough to be interpreted a variety of ways whether you view 'investors' as institutions, households, individuals, etc... What you define as 'fair/orderly/efficient', and what meaningful 'capital formation' really is.

When SEC approved Enron's change in account reporting practices from historical cost to mtm, I would argue that the SEC failed it's mandate to protect investors by allowing disingenuously optimistic instrument valuations. You could argue that eventually the SEC fulfilled its mandate by recovering much of the misappropriate funds, but it's hard to say they didn't also facilitate the disorder in approving these instruments given how that story concludes with a corporate collapse and flurry of regulation...

https://en.wikipedia.org/wiki/Sarbanes%E2%80%93Oxley_Act

[JumpCrisscross]

> When SEC approved Enron's change in account reporting practices from historical cost to mtm, I would argue that the SEC failed it's mandate to protect investors by allowing disingenuously optimistic instrument valuations

In a broad sense, sure. But that means making the SEC both an auditor and determiner of fair value. Even after the ensuing flurry of rule making, that is very much not part of the SEC’s remit.

There is a reasonable debate to be had around whether it should be. But the SEC not double checking auditors is not evidence of its lawlessness.

[rschneid]

The financial markets are more than the SEC but the SEC is part of the financial markets. Evidence of the SEC's imperfect lawlessness implies the greater financial markets are also, in part, lawless.

But my point wasn't even to say whether a given industry as broad as finance is 'lawless' or not, that's your sweeping strawman. I was just saying that in Finance of ALL industries, the line between lawful and illegal has been, and continues to be literally, morally and philosophically blurry...