Response by Ray J. Grzebielski
While a commissioner of the Securities and Exchange Commission (SEC) from 1977 to 1980, Roberta S. Karmel was hailed by the business community for her outspoken opinions dissenting from liberally oriented policies of the SEC. At the same time, she was condemned by citizens' groups and consumer advocates as a servant of corporate America. In a recently published book, Regulation by Prosecution, Karmel presents her criticisms of the regulatory policies of the Securities and Exchange Commission and defends the positions she took while a commissioner. She also hopes to point the direction for future federal securities regulation.
This commentary is half-way between a book review and a response. It is a review in the sense that it addresses some of the assertions Karmel puts forth in her book. It is a response to the extent that it challenges those assertions rather than merely reports them. Moreover, it attempts to answer Ms. Karmel's charges with observations on the public policy considerations behind the securities regulation framework. Contradictions perceived within Karmel's arguments are also noted.
Karmel seeks to limit SEC action to its traditional areas of regulation. This would discourage innovative approaches to new problems. Karmel protests that her positions are in harmony with the American liberal tradition which assumes that the government regulates the market system to control abuses and to protect individual rights. The net result of her recommendations, however, is very different. While deregulation of the securities industry cannot be accomplished without congressional action, Karmel at least would maintain the status quo by refusing to expand future regulation beyond settled practices. She also believes that in certain instances the SEC should depend on the industry it regulates to lead the way in setting the agenda for future developments. While the end product might not be federal abdication of securities regulation, Karmel's approach certainly envisions a more limited role for government.
About the Author
Ray J. Grzebielski. Assistant Professor, DePaul University College of Law; B.A., Northwestern University, 1970; J.D., Northwestern University, 1973; LL.M., Georgetown University, 1978; M.B.A., University of Chicago, 1981; Member, Illinois Bar.
Citation
57 Tul. L. Rev. 930 (1983)