Introduction At this moment in history there is an ever increasing debate over government regulation and whether or not we need more or less of it. Those in favor of government regulation argue that they are intended to improve unfairness in the system it is regulating and to help avoid failures in that system that could have catastrophic affects to the entire country or the world. They cite the stories of Enron and the more recent 2008 financial crisis as proof that government regulations is necessary. Those against government regulation argue that it should be eliminated because it hinders the prosperity of American businesses. It’s hard to say who is right but we can start by examining some of the government regulations enacted in the 20th century and how they relate to recent business scandals. The Securities Act of 1933 & 1934 The Securities Act of 1933 otherwise known as the ‘Truth in Securities Act’ was created with the objective of renewing the public confidence in the sale of securities following the stock market crash of 1929. This act was the first significant piece of legislation that the federal government enacted to regulate the sale of securities. Prior to the passage of this piece of legislation the sale of securities fell under the regulation of the blue sky laws which were regulations created by state laws. The Securities Act of 1933 was created with two purposes in mind. The first purpose was to create more transparency as it relates to financial statements, so that investors could make better and more informed decisions about what they would invest their money in. The second was to create laws that would prevent any fraudulent or misleading activities in the securities markets. This piece of legislation primarily addresses the area concerning the initial sale of securities. The Securities Act of 1934 otherwise known as the ‘Exchange Act’ was also created with the intent of renewing the public confidence in the sales of securities following the stock market crash of 1929. This act was created to accomplish two goals. The first was to create regulation for how investment transactions take place in the secondary market. The second was to create regulation for how the financial markets and participants conducted themselves so as not to harm the public. This act also gave rise to the Securities Exchange Commission (SEC) for the purposes of enforcing securities laws like the Securities Act of 1933 and 1934. The U.S. Securities and Exchanges Commission (SEC) is an independent agency of the federal government whose primary responsibility is to enforce the federal securities laws; including the Securities Act of 1933 & 1934. The SEC has had made many mistakes throughout its history but at this moment in history none stands more prominent than their failure to stop Bernie Madoff before it was too late. In December of 2008 federal authorities arrested Bernie Madoff for several securities violations that resulted from his fraudulent activity that can best be described as the largest Ponzi scheme in history. In order to understand how the Securities and Exchange Commission failed we must first understand the circumstances surrounding the Madoff scandal. According to Madoff since 1991 he was running a Ponzi scheme that exceeded thousands of billions of dollars. The sales pitch was that Madoff could guarantee between 18%-20% annual returns with little or no risk. This was something that was unprecedented on Wall Street. The strategy is known as a split-strike strategy and the simplest way to explain it is that you purchase premium stocks and then take options out on those stocks in order to limit your losses. On Wall Street this strategy had never produced the results that Madoff claimed he did. What Madoff was actually doing was taking the money that people were investing with him and spending it on himself, relatives, his businesses or in perpetuating the fraud. He would then present his investors with false statements every year that proved the returns that he claimed. If any clients withdrew their money, then Madoff would simply use the money from new investors to pay old investors. In most cases most people did not know they were investing with him because the money was coming from hedge funds who were funneling millions of dollars into him in return for keeping a larger share of the fees. Madoff also took investments from a lot of nonprofits, who by law cannot withdrew too much many from their investments on an annual basis. This meant that Madoff limited the amount of mon