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Lorenzo Ayres

Richard C. Sauer, 2010

Selling America Short

An SEC lawyer explaining why the frauds he could see were the hardest ones to stop.

Wiley.

Lorenzo Ayres / 1 min

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Sauer was an enforcement lawyer at the SEC and then went to work at a hedge fund, and the book is his account of investigating securities fraud from inside the agency that is supposed to stop it.

It is not flattering about the agency, and that is what makes it worth reading rather than a complaint. He is specific about why cases died: resources, internal politics, the difficulty of proving intent, and the fact that the people committing the fraud were often better funded than the people investigating it.

The lesson I took is uncomfortable and I think it is right. Somebody noticing a problem is not the same as anybody being able to do something about it, and if you are relying on a regulator to have caught something before you buy it, you are relying on an organisation with a budget and a queue.

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