Plenty has been said about the Securities and Exchange Commission launching surprise audits on money managers, ostensibly to ensure there are no more Bernard Madoffs. But in reality, the SEC's chief Mary Schapiro has backed down after intense lobbying by fund managers and has come up with a solution that won't solve the problem at all.
Bloomberg reports that the SEC has decided it only requires about 1600 US fund managers submit to surprise audits. That's 83% fewer than what was announced just a few months ago.
Bloomberg reports that this is part of a pattern. It's one of several proposals Schapiro later scaled back or delayed. These include plans to rein in short-sellers, after lobbying by hedge funds and plans to give investors more power to decide who sits on corporate boards after the U.S. Chamber of Commerce questioned the SEC's jurisdiction.
The pattern is clear. The SEC is now subject to enormous political pressure. Protecting shareholders might well be less a priority
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