Last month, Peiter "mudge" Zatko blew the whistle on Twitter to the Securities and Exchange Commission (SEC). Millions of people tuned in to hear Zatko testify before Congress that Twitter had violated multiple laws. Even assuming Zatko is right, and Twitter did engage in serious legal violations, it's never guaranteed that the SEC will prosecute. In fact, even if the attorneys at the SEC investigate Twitter and decide prosecution is warranted, the decision is ultimately made by five SEC Commissioners who vote on the issue in secret. Not only is the vote itself held in secret, but the results are also kept secret. As a result, even if the investigating attorneys at the SEC confirm Zatko's allegations and recommend prosecution, Twitter could escape prosecution because of the Commissioners' vote and the public would never even know there was a vote in the first place. This is a problem.
How the SEC Chooses to Prosecute
The SEC is comprised of multiple departments that each play specialized roles when it comes to bringing an enforcement action. When a person reports a violation to the SEC, it is reviewed by the Office of Market Intelligence (OMI), which is responsible for monitoring and analyzing tip-offs about potential legal violations. If the OMI believes there is credible evidence of a violation, it will refer the information to a specialized unit in the SEC’s Enforcement Division. SEC attorneys in Enforcement Division, sometimes called ‘staff attorneys’, will begin an...
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