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This Article is about the incentives that motivate the Securities and Exchange Commission (SEC) and the ways in which those incentives influence the SEC’s policies. Unlike most other treatments of bureaucratic incentives, this analysis begins with the assumption that the SEC is populated by honest, professional, and skilled personnel who work hard and are motivated to succeed. Despite the high quality of its staff, the SEC has not been successful in recent years. This Article argues that the SEC’s lack of success results from the way that staff members respond to three sets of endogenous incentives.

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