Mark Cuban, the billionaire investor who referred to the Securities and Exchange Commission as “worthless” and “arrogant,” has found an unlikely ally in his critique of the agency.
On a panel at the MarketCounsel Summit in Las Vegas, he shared some common ground with Christopher Cox, who was chairman of the SEC during the initial investigation into allegations that Mr. Cuban had traded on insider information. Both criticized the SEC for its focus on bringing enforcement actions.
“I have grown to like Chris; I didn't expect to have that [relationship],” said Mr. Cuban, the owner of the Dallas Mavericks basketball team and one of the investors featured on the TV show “Shark Tank.”
The two, who were meeting face-to-face for the first time since Mr. Cuban's high-profile victory last year against the SEC, said the agency was too top heavy with lawyers and directed too many resources to bringing and fighting enforcement cases. The SEC brought a
record 755 enforcement actions in the 2014 fiscal year.
“The problem as we have thought about it has not been lack of money or lack of will, but lack of focus,” said Mr. Cox, who was chairman under the Bush administration from 2005 to 2009. “We're not watching and using data to survey properly, and we need to allocate resources away from lawyers and to other things.”
Half of the regulator's staff was focused on enforcement, he added. Meanwhile, according to Mr. Cox, only six of the 4,200 employees at the SEC, for example, work in the Office of Municipal Securities, which advises the SEC on policy matters related to the municipal bond market.
“We're missing a lot here,” Mr. Cox told the audience of more than 500 attendees. “The SEC needs to pay attention to all these other things as well.”
Mr. Cuban shared the sentiment, noting he had spent $20 million over eight years to fight his case.
“Their arrogance was scary, and there's nothing that has come across suggesting that's changed,” he said, adding that their strategy amounted to “intimidation.”
Mr. Cuban and Mr. Cox's criticisms come as many in the industry have bemoaned
the lack of oversight of investment advisers.
The SEC has examined only around 9% of investment advisers each year. This year, the SEC said it was focused on a campaign to visit “
never before examined” firms.
An SEC spokeswoman, Judith Burns, did not reply to an email seeking comment. MarketCounsel invited the current chair, Mary Jo White, to the conference, but she declined, according to Brian Hamburger, president and chief executive of Market Counsel.
Part of what the SEC could do better is put data from disclosures into the hands of aggregators, who can then analyze that information for potential problems and trends, Mr. Cox said.
He also made other recommendations, such as establishing more permanence to the management positions, including the commissioner roles.
“The commission needs to get back in the saddle, and we need to have some oversight,” Mr. Cox said.
Mr. Cuban, however, said speaking in hyperbole that the only way to improve the SEC was to start over and “burn it down.”
