SEC: Not A Mere Watchdog, But A Bloodhound Mandated To Bite
September 4, 2012
Dr. W.A. Wijewardena
SEC is not a mere watchdog
After the recent Securities and Exchange Commission of Sri Lanka fiasco, the media and many analysts, calling it the ‘watchdog’ of the securities market, had expressed the wish that it should remain a mere watchdog. Some had even found fault with the former chairpersons of the SEC that they had stepped beyond the legitimate boundaries of their jobs and caused mayhem to the otherwise smoothly functioning market. What these critics had meant was that SEC should simply watch over the affairs of the securities market and bark at the top of its voice if any wrongdoing is happening there. It should not go after the wrongdoers and bring them to book and that job is reserved for other law enforcement agencies. In other words, the media and analysts had not wanted SEC to be a ‘bloodhound’, the job of chasing after wrongdoers and subjecting them to the due legal processes.
SEC is both a watchdog and a bloodhound
This perception that SEC is merely a watchdog is true only partly. That is because its mandate is much more than being a watchdog. True that it has to, as a part of its routine work, keep the securities market under its constant surveillance and growl by baring its fangs whenever it sees a predator seeking to prey on innocent market participants. But, this is the preventive job of SEC like the job of an invigilator at an examination. There, the invigilator will see to it that the students do not cheat at the examination and cause disturbance to those who are honestly set to answering the papers. Her job is to maintain order at the examination hall and thereby make it a place for students to show their excellence as best as they could. She just makes a noise at the wrongdoers to keep the place in order. If she is unable to do that, she can only report the wrongdoers to examination authorities, since she has no powers to investigate into them by herself. It is up to the authorities to take or not to take action against the wrongdoers she has reported on.
But unlike an invigilator, SEC has to go another step forward and investigate into the miscreant’s work. If it finds that the miscreant whose work has been investigated has in fact harmed the other market participants, it can take a wide course of action against him. That part requires SEC to bite the miscreant with the strong teeth provided to it. Hence, SEC is both a watchdog and a bloodhound.
