In the SEC's defense, they're tiny and woefully underfunded. That's why they always come out swinging hard, and are so intransigent. They want interpretations that make it easy for them to penalize and convict. Big companies have enough legal resources, as well as enough pull in Washington, to wipe the floor with the SEC unless the law is crystal clear in the SEC's favor. The SEC is hardly the only regulatory agency that wants easier convictions, or is fearful of lobbyist pushback, but it's a perpetual issue with the SEC, and the situation is peculiarly and qualitatively unique.

If the SEC gives a small investor an inch, the big financial houses will extend that into a parsec. And those companies are constantly watching for those opportunities. So, yeah, the SEC isn't shy about picking a fight with the little guys because they only pick fights they think they can win, preferably outside court; the consequences of losing a fight are huge. This strategy isn't unique to the SEC, but it's uniquely consequential to their authority and effectiveness in general. It's an unfair situation all around, but at the end of the day responsibility falls on Congress.

In any event, my point was that if the situation seems confusing, it almost certainly is a confusing situation without any obvious answers.

That explains how they won those cases against small fry like Madoff and Martha Stewart.

Those were exceptionally (almost laughably) easy cases and, IMO, make my point. The hard ones were the myriad cases of ratings and other deceitfulness that led up to the 2008 financial crisis. Only a single top banker was successfully criminally prosecuted, and the list of settlements was infamously underwhelming: https://en.wikipedia.org/wiki/List_of_major_SEC_enforcement_...

For further reading see https://www.propublica.org/article/the-rise-of-corporate-imp... and https://www.theatlantic.com/magazine/archive/2015/09/how-wal...

The headline is clickbait. The article's actual claim is that scandals a torts are securities fraud.