Comment Text:
As an individual, non-institutional investor with more than 30 years' experience, I support the CFTC's proposal to renew the collection and analysis of Market Surveys.
The collection and analysis of such surveys is basic to the CFTC's performance of its core statutory responsibilities to investors and to the general public. CFTC managers and staff cannot exercise their statutory authority and duty to safeguard the honesty and integrity of the financial services industry through regulatory activity, or identify and analyze issues of concern within that industry, without the regular and ongoing collection of Market Survey data concerning both the regular functioning of the markets and areas of potential regulatory concern.
The CFTC's authority, duty, and need to collect and analyze Market Survey data does not occur in a vacuum. The most important function of the CFTC is to protect investors by identifying, analyzing, and (if feasible) ameliorating market risks created by unlawful, manipulative, deceptive, or reckless practices of securities issuers, brokers, traders, securities rating firms, banks, insurance companies, and other participants in the financial services industry.
Investigations following the stock market crash of 2008-2009 have revealed that such practices are prevalent in the financial services industry. Investors can no longer rely upon the honesty and integrity of that industry as a whole, and can thus no longer rely upon the honesty and integrity of the markets. Investors must also approach with great skepticism the question of whether to rely upon the honesty and integrity of any individual firm engaged in the financial services industry.
The financial services industry's concerted opposition to the federal Dodd-Frank legislation, which was greatly weakened by lobbying prior to its enactment, and ongoing organized opposition to almost any regulatory activity by the CFTC, SEC, or other federal regulatory agencies, serves to undermine continually any remaining public trust in the honesty and integrity of that industry.
From the perspective of an individual investor, the financial services industry as currently constituted is no longer trustworthy because it is pervasively affected by unlawful, manipulative, deceptive and reckless practices. Such practices are no longer the exception. Increasingly, they are the rule. Large and growing components of that industry, including hedge funds subject to minimal disclosure requirements "dark pools" of electronic trading exempt from public disclosure requirements, and the use of high speed trading by firms which gain substantial financial advantages through advance information on pending trades by individual investors and smaller firms, avoid much or all of the regulatory oversight which formerly protected investors and the public by safeguarding the honesty and integrity of the industry and the markets
Ostensibly independent securities ratings firms have been revealed to be shills and touts corrupted by the fees paid by issuers, brokerage firms and banks for ratings, and by a "race to the bottom" in terms of providing increasingly lenient, opaque and misleading ratings of securities in order to obtain or retain business from such firms.
Individual financial industry firms, and financial industry trade groups, may dislike and seek to dispute this view of the financial services industry. What they ignore, at their peril, is that this is how the public now perceives the industry. This perception is not likely to change so long as the industry reflexively resists all efforts to clean up the cesspool it has become.
The CFTC needs to do everything possible within its statutory authority to protect investors and the general public from the widespread unlawful, manipulative, deceptive and reckless practices which currently undermine investor and public confidence in the financial services industry. Renewal of CFTC's collection and analysis of Market Survey data, as proposed by the CFTC, is an integral, essential, and indispensable part of such efforts. For these reasons, I strongly support the CFTC's proposal.
