March 22, 2021
This new rule is a badly needed change to our securities market. For far too long, large market participants have been illegally manipulating securities prices and I'm glad to see this getting more attention.
That being said, the rule doesn't go far enough in protecting small market participants from the predations of the large. At a minimum, the fines for breaking financial laws should be greater than the payout for breaking the law in the first place. If I were unethical and I knew, for example, that the maximum penalty for robbing banks was, say, two weeks in jail regardless of the number of banks I'd robbed before getting caught, what incentive would there be for me to not aggressively rob as many banks as possible before I inevitably got caught? If all I lose is two weeks of my freedom in jail while gaining potentially millions of dollars, what rationally self-interested person would choose differently?
Our regulatory system is incentivizing market actors to behave unethically. This has to change.