What Happens if Agencies Like the SEC are Materially Weakened?

The theme today seems to be “what a difference a day makes.” Last week the Commission was counting the billions of dollars it recovered from the fraudulent schemes of Robert Allen Stanford. This week the agency is trying to justify its existence to those who would like to hammer and slash not just the SEC but also every other federal agency. So the question is, if in fact the hammering and slashing continues and is effective who will protect investors and the markets? It may not be if agencies like the SEC are downsized and significantly weakened. Take, for example, the latest case handed down by the Commission, SEC v. Quartarano, Civil Action No. 2:21-cv-02305 (E.D. N.Y.).

The case is a previously filed action which names as a relief defendant Leonard Quartarano. Relief Defendant Quartararo consented to the entry of a final judgment that required him to give back the money he obtained from wrong-doing – disgorgement. He also had to pay prejudgment interest – essentially the money Mr. Quartarano made from having money he should not have had in the first place. In Mr. Quartarano’s case resulted in him paying into the Court $20,103.98 in disgorgement and prejudgment interest of $33,128.88. The Court’s order here means that Mr. Quartarano did not profit from his wrongful conduct. In a parallel state law case the court directed Lisa Eckert to pay disgorgement of $46,600. See New York v. Quartararo, No. CR-0000238/2021 (Sup Ct. NY). The underlying case in each instance was based on situations in which investors had been defrauded of their money by those who had obtained it through wrongful conduct. See Lit. Rel. 26260 (March 4, 2025).

The question we began with about what a the difference a day makes is this: Do the actions reported above help deter other investors from suffering similar losses because of the work by agencies such as the SEC and those at a New York state agency that filed he second action? What happens if there is no federal or state agency to protect investors in the future? Is it sufficient for those of us who did not suffer the losses to say “there will be someone else? Who??

See Lit. Rel. No. 26260 (March 4, 2025)