On September 19, 2008 David Goldman, a staff writer for CNNMoney.com, reported that The U.S. Securities and Exchange Commission (SEC) placed a temporary ban on the short selling of financial companies’ securities. The action was taken as a defensive maneuver to help stabilize trading in the 799 financial companies named in the ban. The SEC reasoned that short sellers where manipulating the stock prices of the named companies and that banning the practice of short selling would restore regularity to the markets (Goldman, 2008). The practice of short selling securities, under normal market conditions, is not an illegal practice and actually promotes a more efficient market place (Staley, 1996). With that in mind, where does the SEC, under the direction of Christopher Cox, derive the authority to place such a ban and enforce it? The answer to that question is found in the document that provides the current frame work for the legal environment of the United States of America, the U.S. Constitution. Article I of the U.S. Constitution grants legislative power to Congress. Court precedent holds that Article I, section 8, gives Congress the power to create administrative agencies that have the power to establish and enforce laws. This ability to entrust certain powers to administrative agencies is known as the delegation doctrine (Miller & Cross, 2007). After years of depression and following the stock market crash of 1929, Congress used this delegation doctrine to form the SEC as an independent administrative agency. The Securities Exchange ACT of 1934 laid the frame work for the new agency. The SEC was formed to regulate the U.S. stock market and to prevent abuse and market manipulation and to protect the public from deceitful practices (Soderquist & Gabaldon, 2006). The power that the SEC has is derived from the Act of 1934. Section 12 (k) (2) (A) of the Act states: “The Commission, in an emergency, may by order summarily take such action to alter, supplement, suspend, or impose requirements or restrictions with respect to any matter or action subject to regulation by the Commission or a self-regulatory organization under this title, as the Commission determines is necessary in the public interest and for the protection of investors.” (University of Cincinnati College of Law, 2008) In the SEC’s official press release on September 19, 2008, they cited this specific section of the Act of 1934 as the source of its authority to carry out the ban.
Instead, the Constitution grants Congress the power to pass legislation regulating all commerce bar intrastate trade (U.S. Const. art. I, § 8, cl. 3). Coupled with the subsequent clause enabling Congress to pass any legislation they deem necessary in order to carry out the laws passed by dint of the body’s Constitutionally-enumerated powers (U.S. Const. art. I, § 8, cl. 18), the enumerated power to regulate interstate and international commerce endows Congress with a significant capacity to control the nation’s
The Constitution's bestowing of executive power to a single president by Article II of the United States Constitution
A Guide to the Sarbanes-Oxley Act of 2002 (2006). Retrieved December 16, 2009 from www.soxlaw.com
The seriousness of insider trading was not brought to light until some time after the stock market crash of 1929. This specific event can be summed up as a day where many investors traded around 16 million shares
The Sarbanes-Oxley Act was enacted on July 30, 2002. It was enacted by the 107th United States Congress. It is named after sponsors U.S. Senator Paul Sarbanes and U.S. Representative Michael G. Oxley. It is also known as the ‘Public Company Accounting Reform and Investor Protection Act’ in the Senate and ‘Corporate and Auditing Accountability and Responsibility Act’ in the House. The main purpose of this act was to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes. This act was enacted as a result to a number of corporate and accounting scandals including those affecting Enron, Tyco internationals, Adelphia, Peregrine Systems, and WorldCom. The Securities Exchange Commission (SEC) adopted many rules in order to implement the Sarbanes-Oxley Act.
U.S. Securities and Exchange Comission (2000). Selective disclosure and insider trading. Accessed on February 15, 2009 at: http://www.sec.gov/rules/final/33-7881.htm.
The Legislative Branch is Congress, which has just two branches - the House of Representatives and the Senate. To understand the power held by the Legislative Branch, we should refer to the Constitution itself. Per Section 8 of Article I, Congress may only act within the powers granted to them explicitly in the Constitution, these are called enumerated powers. But this doesn’t mean the powers granted to them were diminutive. The entire legislative power was constitutionally delegated to Congress. The House and Senate serve, for the most part, to work together (though not necessarily in harmony) on passing laws, and both House and Senate must approve all bills. The framers began with the forming Article I: The Legislative Article for a simple reason; law making is an extremely important function for our government. I believe they dug their heels in here first because they intended for it to be the longest, most thorough article in the Constitution, and every word truthfully serves a divine purpose of laying out the structure of how our Legislative Branch should run. With a mere 2,...
The Volcker Rule, named after the former chairman of the United States Federal Reserve Paul Volcker, was first publicly discussed in January 2010. President Obama had proposed the Volcker Rule as an additional ruling to the Dodd-Frank Wall Street Reform and Consumer Protection Act, a bill that was at the time already under consideration by Congress. The Dodd-Frank Wall Street Reform and Consumer Protection Act, also known as the Dodd-Frank Act, was projected to help further promote and regulate financial stability of the United States’ economy, especially during the Great Recession, which officially lasted from 2008 to 2010. The general purpose of this Act is to regulate the financial regulatory system by avoiding any excessive or unnecessary risk-taking by large, influential banks, which is one of the significant causations that initially triggered the financial crisis. One crucial piece of this Act is the Volcker Rule, as it seeks to financial regulators to reform the ways banks can invest and regulate trading in the markets. The Volcker Rule is intended to greatly reduce risks within the banking industry by setting a restriction to trading. It limits the way banks invest their money within “speculating” markets, in which are not related to or benefit their customers. The more specific banking entities the Volcker Rule emphasizes on prohibiting any investments, ownership, or sponsorship of hedge funds, private equity funds, as well as, any “proprietary” trading. Additionally, it generally prevents financial institutions from using any of the bank’s money, which is insured by the FDIC, to manage any private equity funds and hedge funds.
The Dodd-Frank Wall Street Reform and Consumer Protection Act brought the most significant changes to financial regulation in the United States since the reform that followed the Great Depression. It made changes in the American financial regulatory environment that affect all federal financial regulatory agencies and almost every part of the nation’s financial services industry. Like Glass-Steagall, the legislation passed after the Great Depression, it sought to regulate the financial markets and make another economic crisis less likely. Banks were deregulated in 1999 by the Gramm-Leach-Biley Act, which repealed the Glass-Steagall Act and essentially allowed for the excessive risk taken on by banks that caused the most recent financial crisis. The Financial Stability Oversight Council was established through the Dodd-Frank Wall Street Reform and Consumer Protection Act and was created to address the systemic risks in the United States financial system and to improve coordination among financial regulators.
Ponzi schemes are a continuing problem in the investment world and can only be stopped if the Securities and Exchange Commission does better safe guarding investors’ money. This paper will address Bernie Madoff’s Ponzi scheme and how he was able to steal billions of dollars from investors. The reasons why the SEC responded so slowly to Bernie Madoff’s Ponzi scheme, and what can be done in the future to make sure another Ponzi scheme of this magnitude does not happen again. Also included in this paper will be examples of good and bad leadership theories.
...Security Agency (FSA) was created. The FSA was comprised of SSB, the Public Health Service, the Office of Education, the Civilian Conservation Corps and the U.S. Employment Service. In 1946, the SSB was replaced by the Social Security Administration, with one commissioner. In 1953, President Eisenhower eliminated the FSA. He the created a new Department of Health, Education and Welfare (HEW) in which, Social Security was made part of. In 1994legislation was passed making Social Security an independent agency again (Social Security: A Brief History, 2005, p. 27-28).
Article I of the Constitution lays out the design of the legislative branches of the US Government. It is broken down into 10 sections with each section having its own set of clauses. Section 8 states that Congress shall have Power to lay and collect Taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States. . (US. Constitution, 2015). Article I, Cornell University Law School. Retrieved from https://www.law.cornell.edu/constitution/articlei. This section contains clauses that further expand upon the initial input and specifically has a “Necessary and Proper” or the “Coefficient or
But since the latter part of the 1960’s, stricter enforcement of insider trading practices has been put into place because of financial scandals. The first to be discussed is a concrete definition of “insider trading” as it is discussed in this essay. According to the “European Communities 1989 Insider Dealing Directive”, insider trading is the dealing on the basis of materials, unpublished, price-sensitive information possessed as a result of one’s employment. (Insider Trading)” Ivan Boesky pleaded guilty to the biggest insider-trading scheme discovered by the United States Securities and Exchange Commission (SEC). He made $200 million by profiting from stock-price volatility in corporate mergers.
In 1934 the Securities Exchange Act created the SEC (Securities and Exchange Commission) in response to the stock market crash of 1929 and the Great Depression of the 1930s. It was created to protect U.S. investors against malpractice in securities and financial markets. The purpose of the SEC was and still is to carry out the mandates of the Securities Act of 1933: To protect investors and maintain the integrity of the securities market by amending the current laws, creating new laws and seeing to it that those laws are enforced.
United States Securities and Exchange Commission. (2011). Dodd-Frank Act Rulemaking: Whistleblower Program. Retrieved from http://www.sec.gov/spotlight/dodd-frank/whistleblower.shtml