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California Securities Commission and Civil Code Report (Assessment)

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Updated: Mar 18th, 2021

Mary Jo White and the Securities and Exchange Commission

Who is Mary Jo White?

Born on December 27, 1947, Mary Jo White is “a former prosecutor and defense lawyer” (Tran 3). He has a long record of civil service in the country. She is married to John W. White. She worked as a U.S Attorney for Southern New York District for nine years. Such a record is an indication of her experience as a civil servant. The nine years she worked in the country’s judicial system saw her tackle some of the highest-profile cases in history. For instance, the lady oversaw the prosecution of terrorists suspected of the 1993 World Trade Center bombing. Also, she prosecuted John Gotti in a case that attracted a lot of attention. Gotti was one of the well-known mafia bosses in the region. The above are just some examples of the cases she handled in the nine years (Warner 18).

Other responsibilities that White assumed in her career included serving as an independent director for Nasdaq Stock Exchange. She served in this position between 2002 and 2006. She also served as the chair of Debevoise & Plimpton’s litigation department. As such, her immense experience in this field is apparent.

What Job does she do for the Federal Government?

Currently, Mary Jo White serves in the federal government as the Chairwoman of the Securities and Exchange Commission (Tran 3). Her appointment to this powerful and very influential position made her the 31st chairperson of the Securities and Exchange Commission. She is the second woman to lead the agency and the first prosecutor leading the regulatory agency in its history (Warner 18).

What is the Job of SEC?

The Securities and Exchange Commission (SEC) is one of the several agencies formed by the United States federal government. By this law, the SEC is tasked with the responsibility of enforcing the Trust Indenture Act of 1939. It is also tasked with the responsibility of implementing the Securities Act of 1933 and the Investment Company Act of 1940. Also, the Sarbanes-Oxley Act of 2002 and the Investment Advisers Act of 1940 are under the auspices of this commission (“Securities Exchange Act of 1934” par. 23).

The major role of the SEC is regulatory. Therefore, the primary responsibilities of the SEC include enforcement of federal securities laws and regulation of the securities industry. The commission also regulates the national stocks and options exchange market. Electronic securities, an emerging market in the securities industry, are also under the regulation of the commission (“Securities Exchange Act of 1934” par. 57).

Due to the wide scope of its responsibilities, the law allows the Securities and Exchange Commission to delegate some of its duties. Through a published order or rule, SEC can delegate its functions to individual commissioners, employees, and employee boards. The commission can also delegate its duties to administrative law judges and commissions, especially when there are cases that need to be heard (“Securities Exchange Act of 1934” par. 63).

The SEC protects investors, regulates the market, and monitors corporate takeovers in the United States of America. The three are just some of the roles the commission plays in the country. The statutes enforced by the commission facilitate full public disclosures and protect public investors from fraud and manipulative practices. Such practices are prevalent in the securities market (Tran 4).

When was SEC Created?

The agency was created in 1934.

What is the Name of the Law that created SEC?

The body was created by the Securities Exchange Act of 1934. The structure and roles of the commission are specified under section four of the act, which is currently codified as “15 U.S.C. § 78d” (“Securities Exchange Act of 1934” par. 57).

How does SEC get its Money?

The SEC usually incurs substantial operational costs in the execution of its mandated duties. Aside from allocations from the treasury, SEC imposes fines on individuals or corporations found guilty of violating industry regulations. The fines act as restoration for damages to either the state or victims of the violations.

In 2012, Mary L. Schapiro, then Chair of SEC, noted that the organization had filed “a record 735 enforcement actions in the fiscal year” (Cheney 26). Also, the organization had collected amounts exceeding $2.8 billion from penalties and disgorgements. SEC reorganization between 2009 and 2010 was credited with the achievements.

What are some of the Criticisms directed towards the SEC between 2000 and 2007?

Between 2000 and 2007, the SEC has been subjected to several criticisms. One of the major criticisms is the recent questioning of the effectiveness of the organization (Cheney 26). For instance, the organization was faulted over its failure to spot problems with Bernard L. Madoff Investment Securities LLC. It was also criticized for failure to detect anomalies in the operations of Lehman Brother Holdings and other deals before they collapsed. Members of the public were deeply concerned over such failures (Cheney 26). There are also concerns raised over major Wall Street organizations investigated by the SEC about fraud and found guilty. Critics are concerned by the lenient punishment meted out on these organizations. However, the organization is quick to defend itself. The organizations’ top leadership has especially come out to defend their work.

What has SEC been up to lately?

Recently, the organization has received immense coverage in the media. The coverage has been both positive and negative. For instance, the organization’s requirements for posting margins early this year faced a lot of opposition from the media. Many of the critics fear that the rule regulating security-based swap dealers and their posting of margins would stymie financial operations in the country (Balras, Christensen, and Senate 21).

According to Robert Pickel, CEO of the International Swaps and Derivatives Association, Inc., the requirements for posting margins are problematic. The requirements would curtail the use of ‘uncleared’ swaps in hedging. Such a measure will disrupt financial services, such as corporate financing and the availability of home loans (Balras et al. 22).

California Civil Code section 1770

Unfair Methods of Competition and Unfair or Deceptive Acts or Practices Representing that Goods are Original or New if they have Deteriorated Unreasonably or are Altered, Reconditioned, Reclaimed, used, or Secondhand

Amani Inc. is a U.S based company operating in New Albany City, Mississippi. The company specializes in the distribution of furniture in the region. The organization has operated in the region for several years. Recently, several consumers have complained about the quality of the products sold by the company. The company poses as a seller of firsthand items, ranging from office furniture to furniture for home use. The company also purports to manufacture the furniture locally. The organization used to collect customized orders from customers with promises of 100% conformity to requirements. In its advertisements, the company claims that its products are of high quality, standardized, and 100% locally made. However, in an actual sense, the company has been violating all these promises.

Out of the large number of furniture orders placed with the company, only a small fraction proves to be locally made. The company imports some of its products, which are refurbished and then forwarded to the clients as new. Restoration of the products takes place in the company’s local factories, where new products are claimed to be made. Due to these undertakings, the company can sell its products at a much lower price than its competitors. Cheaper prices are possible since the production costs are lower than would be expected if the company maintained standards they purport to hold.

The company violates the California Civil Code 1770, section (a), number (6. Unlike the competitors operating in the region, most of the products distributed by Amani Inc. are not original. Also, the products are secondhand and not brand new as expected. The actions of the company are not only unfair to the consumers, but also the competitors. If the other companies try to compete with Amani and engage the company in price wars, they will lose a lot. Thus, Amani Inc. is guilty of unfair competition and practices under this code.

Advertising Goods or Services with Intent not to sell them as Advertised

Advertising Goods or Services with Intent not to Supply Reasonably Expectable Demand, unless the Advertisement Discloses a Limitation of Quantity

Bidou Limited is a national telecommunications company operating in the country. It has operated in the industry for more than ten years. Since its inception, the company has offered telecommunication services, such as internet and telephone calls. Although the company has continually developed new products over the years, the internet and telephone services are its backbones.

Increasing competition in the telecommunication industry has, however, forced the company to resort to unethical practices. Such unethical practices are especially evident in the company’s advertising campaigns. The company is aware of the power of advertising. It has effectively used this strategy to manipulate consumers in the industry. Recently, the company lowered the prices of services and informed consumers about this through advertisements. The company promises consumers a high quality of services. Its ability to affect price cuts under the current difficult market conditions raises suspicion.

A critical analysis of the company reveals that it charges consumers more than it claims. The company has put in place energy-saving policies that greatly undermine the quality of services delivered. In the advertisements, the company purports that its internet speeds are fast and the signal strength. Also, the company promises to reward consumers with additional bundles depending on the amount bought.

However, it appears the company does not maintain honesty in the delivery of services. Reduction of data bundle sizes takes place without the knowledge of the customer given that their devices do not keep track of data consumption. Such reductions are disguised and not detected easily. Signal disruptions and speed fluctuations occur without notice. Coverage is not consistent, compromising the quality of services delivered. Consumers and competitors are not aware of these maneuvers. Under ideal market conditions, these practices are unfair. Competitors are not aware of these practices. Also, the advertisements do not reflect the status of the actual delivery of services by the company.

Representing that Goods or Services have Sponsorship, Approval, Characteristics, Ingredients, Uses, Benefits, or Quantities, which they do not have or that a Person has a Sponsorship, Approval, Status, Affiliation, or Connection, which he or she does not have

Cool springs Limited is a company operating in the U.S. The company specializes in the manufacture and distribution of bottled water. The company is a market leader in the industry, with its services spanning the entire country. Most of the company’s products are consumed in the cities, with the majority of clients being employees of city firms.

The company claims that its bottled water is pure. In addition to distillation, the company claims that the water comes from pure springs located in the Alaskan forests. It also claims that the water is both energizing and refreshing. According to the company, the water has no chemical additives, such as Chlorine. The company claims that the product is certified by various regulating agencies. It also claims the products are inspected by the Food and Drug Administration agency.

In reality, however, the water bottled by the company comes from different rivers in the country. Also, the company harvests rainwater during the rainy season and packs it for sale. Such actions contravene the claims made in adverts. Also, the energizing effect of the bottled water on individuals is dubious. A close inspection of the company reveals that it cannot distill all the bottled water it sells. As such, the company jeopardizes the quality of the product.

Therefore, Coolsprings contravenes the California Civil Code 1770, Section (a) number (5). The representation of the company’s products is misleading. The ingredients, benefits, and endorsements of the product are also misrepresented. Apart from misinforming the consumers about the products, the company achieves a competitive edge from this misrepresentation.

Works Cited

Balras, Stephen, Dallon Christensen, and Nanda Senathi. “SEC Requirements for Posting Margins Face Opposition.” Strategic Finance 95.3 (2013): 21-22. Print.

Cheney, Glenn. “The Teeth of the SEC: Too Sharp, or not Sharp Enough?.” Financial Executive 28.5 (2012): 26-28. Print.

2012. Web.

Tran, Hung. “Striking Out with Mary Jo White.” Money Management Executive 21.5 (2013): 3-4. Print.

Warner, Judy. “Much Ado about Mary Jo White.” NACD Directorship 39.2 (2013): 18-19. Print.

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