Market reform is very much the crusade of Robert Byrne, CEO of Overstock.com (OSTK). His investigation into the practices of faila to deliver by professional short sellers of his own company's stock resulted in a shocking public revelation concerning how these scamsters profit through a legal loophole.
That loophole was closed through Reg SHO.
On Oct. 17 2007, Byrne presented a video/audio slide show called Deep Capture. It is roughly an hour long.
Byrne presents three problems caused by regulatory abuse, from the least to the worst.
Since hedge funds have grown so tremendously in the past 10 years, actually increasing funds under management some 10 fold, they are gradually supplanting stock mutual funds in terms of capital under management.
Stock mutual funds are highly regulated, while hedge funds, which are privately managed equity funds, do business in a murky world with little government, and therefore, public scrutiny. The shareholders aren't necessarily allowed much access into the management strategies.
There is a clear and present danger here. Since these private equity funds escape so much government regulation, they can engage in all of sorts of questionable practices that have litte to do with fair and orderly markets. Since managed money makes up so much of daily trading volumes on exchanges, it is a certainty that private firms, with their access to large sums of capital, are manipulating prices to their advantage and to the disadvantage of the retail account holder, much less the stock mutual fund manager.
When private equity funds go to extremes at price manipulation, including destroying entire companies, there exists the possibility that the entire U.S. economy can be devastated by such excess. Such practices only benefit a small percentage of the population. It is a percentage that is seeking to concentrate wealth into the hands of unscrupulous individuals who apparently have little, if any, concern about the general welfare of the society at large.
This is a matter that screams for public examination through the halls of government and the media.