The Guardians of the Financial World Have Failed

This week, the SEC – the guardian of the financial world – and the Congress that funds it get the slap… and this might be the most well-deserved slap I have ever given.

The average investment advisor – the ones who make all the decisions about how nest eggs are invested – is reviewed by the SEC only once every 10 years.

And, better yet, 40% have never been reviewed… ever.

[ad#Google Adsense 336×280-IA]Even if the SEC gets the entire amount of money requested in the new budget deal, it will only be able to review them every seven years.

Do you have any idea how much damage can be done in seven to 10 years by an unscrupulous advisor?

Ask the folks who were sold junk mortgages before the collapse in 2007 and 2008.

And of the 49,000 investment companies’ filings the industry sends to the SEC each year, only 26% of them even get read.

The International Monetary Fund stated recently that chronic underfunding of the agency has resulted in an insufficient number of experts to provide hands-on supervision or to protect market integrity.

And, according to research out of Berkeley, 14.5% of publicly traded companies engage in fraud each year, and that number is believed to be three times greater than what actually comes to light.

That’s almost 45% of all U.S. companies.

Yet the financial services division of the SEC handles almost four times as many filings each year as the information technology division, but has virtually the same number of staff.

And this is the agency tasked with making sure we can trust the people who are literally running the money world.

When the 2008 collapse hit and everyone was screaming for new laws to protect the markets and investors from the type of criminal behavior that caused it, everyone in the business knew it wasn’t new laws that were needed; it was enforcement of the existing laws.

Well, we have lots of new laws and all of the problems of overregulation; ask the bond market about its liquidity problems caused by the new regulations. But, unless the commission has the resources and the will to do its job properly, the outcome will be the same.

The people who are supposed to have your back at the SEC aren’t there. So, if you don’t double- and triple-check what is being done with your money, you’d better start.

Good investing,



Source: Wealthy Retirement