Ethics

Among the early Chairmen of the SEC were Joseph P. Kennedy and William O. Douglas.   We all know about their evening activities, but at least they did their day jobs.

Today, the folks in Congress are looking for an excuse to take a pass on new banking regulation that campaign contributers don't like.  The SEC staff has given them one.  Instead of enforcing existing regulation, they were busy visiting porn sites on their computers (something that Members of Congress presumably never do):

http://news.yahoo.com/s/ap/20100423/ap_on_bi_ge/us_sec_porn

It is true that some of these web sites could have been offering securities for sale to the public. If so, the sites fit within the 1933 Act Section 3(a)(9) and 3(a)(10) definition of a prospectus (see SEC rule below) (note also that the Rule explicitly excludes any live presentation from the definition). The SEC staff members will argue that they were only doing their jobs.  That is the only argument I can think of in their defense. Seems weak to me.

The White House has a blocker that prevents access to these sites on office computers.  If they had a blocker at the SEC, perhaps someone would have had time to listen to the whistleblowers calling in about a guy named Madoff.

SEC Rule 405 (definitions of terms)

Graphic communication. The term graphic communication, which appears in the definition of "write, written" in section 2(a)(9) of the Act and in the definition of written communication in this section, shall include all forms of electronic media, including, but not limited to, audiotapes, videotapes, facsimiles, CD-ROM, electronic mail, Internet Web sites, substantially similar messages widely distributed (rather than individually distributed) on telephone answering or voice mail systems, computers, computer networks and other forms of computer data compilation. Graphic communication shall not include a communication that, at the time of the communication, originates live, in real-time to a live audience and does not originate in recorded form or otherwise as a graphic communication, although it is transmitted through graphic means.