Seeking Alpha – The Securities and Exchange Commission nicely illustrates a big problem with regulation: capture. Under the pretext of justice or fairness, the SEC routinely hurts the unorganized plebians vs. the insiders. Consider that its first commissioner was Joe Kennedy, who made his first fortune off then-legal bucket shop trading tactics.
The SEC then sat on a monopoly on equity trading, and mandated commission rates for decades, as well as preventing all sorts of competition. You might remember the SEC in penalizing famous frauds like Madoff, Bayou, and Wood River – after they were exposed as frauds by their own investors. These are the police who show up after you’ve tackled and hog-tied your intruder, and then take credit for putting him in jail.