Bill Cara

Congress needs a complete overhaul of the Securities Acts of 1933 and 1934

August 30, 2022

The regulatory compliance firm Vigilant Solutions kindly sent me this report summary, the subject of which offends me.

SEC’s Drafted Strategic Plan for Fiscal Years 2022 to 2026

On August 24th, the SEC released a draft of its strategic plan for fiscal years 2022 to 2026 with a focus on the evolving technology and business models that are changing.


SEC’s Three Primary Goals

The SEC’s drafted strategic plan has three goals to establish below:

  1. Protection against manipulation, fraud, and misconduct for working families (Sticking to their goal on protecting investors)
    • Continue to focus on uncovering key risks and violations that could impact individual investors during the SEC’s examination program which can range from cybersecurity to private fund adviser conflicts of interest.
    • In order for the SEC to improve its capabilities to manage and analyze data, they believe this can be achieved by broadening the use of machine learning and AI, expand disclosure and analytical tools, and develop long-term risk analysis connected to policy development.
    • Focus on an ease of access to public disclosures for investors to easily analyze.
  2. In order to keep pace with evolving technologies, business models, and markets, the SEC plans to develop and implement a robust regulatory framework
    • A key focus by the SEC would be to enhance transparency in private markets and modify rules to ensure that core regulatory principles apply in all appropriate contexts.
    • A more agile approach to being more proactive and engaged on digitization initiatives, and effectively collaborate with other regulators.
    • The SEC wants to continue expanding their expertise in crypto assets, fixed income, and derivatives.
  3. Supporting a skilled workforce that is fully equipped to advance agency objectives and is diverse, equitable, and inclusive
    • The SEC will continue to promote diversity, equity, and inclusion within its workforce by focusing on recruiting, training, and retaining staff with the right mix of skills.
    • Data and information security will be one of the most important focus areas to optimize controls on systems and data based on risk.
    • The SEC is moving quickly to the cloud and will continue to invest in modernizing key enabling systems.

Vigilant’s Final Conclusion

The drafted Strategic Plan was developed to emphasize and strengthen the SEC’s mission to “protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.” This has been a continual trend throughout 2022 and it appears it will continue to be the case for future years to come.


Every organization ought to strive to improve its efficiencies where possible. But the SEC’s effectiveness as a regulator to “protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation” is dubious at best.

For several decades I have complained in government task forces and formal hearings about how the 1933 Securities Act and 1934 Securities Exchange Act are structured to facilitate conflict of interest starting with Humongous Bank and Broker (HB&B). Now, apparently, the SEC is looking into the matter but is focused on only a small part of the big picture, the lowly Financial Advisor rather than take on the egregious conflicts within the entire system.

The Securities Acts were in fact signed into law before the world first heard the word dinosaur. Children born that year grew up and went to university before banks issued the first credit card. There were no parking meters or electric guitars back then. The world had not yet heard of suntan lotion, ballpoint pens, or seen a helicopter. Women had no Nylon stockings or Tampax tampons. Jet engines had not been discovered. Einstein had not yet made his statement that nuclear fission was impossible. In 1933, we hadn’t yet seen a desk phone or a commercial television set. Fewer than 50% of American homes even had electricity!

The world has changed in ways that were unimaginable in 1933.

Back then, commercial banks never conceived they would be permitted to be in total control of all capital markets by providing every possible financial service to the public and still trade their capital against their customers. But money talks and the banks create it.

In the world of sports, the banks are the third player on the field as well as the referee, and the SEC cannot deny it. So don’t ever tell me that its mandate is to “protect investors”. I’m not buying the Kool-Aid which like sliced bread was discovered during the years the Securities Acts were also being conceived.

The SEC is obviously not prepared to review the whole body of 90-year-old legislation that broke down many decades ago and now in the electronic age with global participants is impossible for the SEC to oversee as regulators.

The US Congress needs to replace the 1933 and 1934 Securities Acts with legislation that puts power into the hands of principal owners of capital and not their agents.