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Wall Street Lawyers Join SEC Colleagues to Call for Bigger Budget for Regulators

Tuesday, 8 Feb 2011 | 1:41 PM ET
Picturegarden | The Image Bank | Getty Images

Perhaps one of the most stubborn myths about Wall Street is that it wants to be "deregulated." In fact, Wall Street enjoys a quite comfortable relationship with its regulators.

Witness today's column from Andrew Ross Sorkin:

Amid the looming financial constraints, the SEC is cutting back on investigations, halting hiring—Ms. Schapiro was supposed to hire 800 new people this year—and canceling much-needed technology upgrades to monitor the markets. (Think “flash crash.”)

You might expect that most Wall Street lawyers would be quietly breathing a sigh of relief.

But, perhaps curiously, some of the industry’s best-known lawyers, many of whom once worked at the agency, have been not-so-secretly lobbying Congress for the S.E.C. to get more money.

In an open letter to lawmakers, 41 prominent securities lawyers and professionals wrote: “Investors sidelined with decimated 401(k)s will be unwilling to again risk their capital if Wall Street’s cop-on-the-beat increasingly comes to be seen by the public as a cop-on-furlough.”

Got that? Wall Street wants a more robustly funded SEC because it regards the commission as a key part of its sales pitch to retail investors.

My brother Tim Carney points out that the Wall Street lawyers have an extra-incentive to support SEC enforcement.

"Think about the characters here: these are revolving-door lawyers, whose value to their employer is their connections to the SEC, their familiarity with SEC regulations. If the SEC isn't enforcing regulations aggressively, these lawyers become less valuable," Tim writes.

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