SEC Ethics Probe Points to Bigger Problem With Federal Tort Claims Act Immunity

By Frank Francone. (Real Clear Policy). May 20, 2024

In his thought-provoking book, Skin in the Game, Nassim Taleb argues that when decision-makers bear the consequences of their actions, they tend to make better decisions.  Unfortunately, this doesn’t apply to federal regulators. The Federal Tort Claims Act (FTCA), exempts them from liability for all damages they inflict on Americans by intentional and demonstrably harmful acts.

This exemption – rooted in the hoary doctrine of the “divine right of kings” – gives no recourse to average citizens, feeds a culture of broad deference to federal agencies, and allows wrongdoing by high officials to be largely ignored. For institutions already suffering from plummeting public trust, this should not continue.

Consider, for example, the long series of poor decisions by the Securities and Exchange Commission (SEC) in its attempt to regulate cryptocurrencies. For years, the SEC issued erratic, contradictory, and positively misleading guidance about the legal status of digital assets. Indeed, William Hinman, then the SEC Director of Corporation Finance, appears to have had serious conflicts of interest that may have caused him to mislead investors and fintech companies.

Read the full piece here: Real Clear Policy