Throughout the week over at Securities Docket, I highlight the most interesting columns and blog posts from around the web on the subjects of SEC enforcement and securities litigation. Here is a digest of my picks for the week ending May 20.

Can the Commission Move Past the Scandals?
SEC Actions | Thomas Gorman | May 20, 2011
The question however remains: Will SEC Enforcement ever move beyond the scandals of the recent past? Since at least the discovery of Bernard Madoff and his unprecedented fraud the Commission and its enforcement program have been mired in one scandal or difficulty after another. This repetition has made the letters “SEC” virtually a household word in middle America. Unfortunately Securities and Exchange Commission is now known for failure and error, not excellence.In response to each recent scandal the agency has been the only thing that it can: Assert that lessons have been learned and that going forward there will be enhanced investor protections. The past is past.

Rajaratnam wrongs hide insider trading law flaws
Reuters Breakingviews | Reynolds Holding | May 20, 2011
Raj Rajaratnam's wrongs have hidden the flaws of insider trading laws. The crimes that the Galleon Group founder committed were clear. But many U.S. situations, like the trading indiscretions of Berkshire Hathaway's David Sokol and transactions by members of Congress, turn on rubbery legal concepts with gray areas. With a related trial opening this week and more in the pipeline, the time is right for lawmakers to provide greater clarity.

Has SEC Penalty Authority Corrupted the Enforcement Process?
Securities Law Observations | Robert Fusfeld | May 18, 2011
Some argued at the time penalties were authorized that this would corrupt the enforcement process. They argued that large firms would embrace penalties as an alternative to the much more draconian remedy that allows the SEC to revoke or suspend the registration of a regulated entity (brokers, dealers, exchanges, investment advisers, investment companies). The skeptics argued that SEC staff and commissioners would become enamored of preening at press conferences announcing mega-million dollar settlements and that penalties would become merely a cost of doing business for big regulated firms. Unfortunately it seems those skeptics were correct and the prospect of penalty-focused SEC sanctions has ceased to be effective.

Inside the Galleon Jury Deliberations
WSJ.com | Jenny Strasburg, Jessica Silver-Greenberg and Jeannette Neumann | May 16, 2011
They nicknamed a prosecutor "Napoleon" and a defense lawyer "George Washington." To break the tension, they parodied lines from wiretaps. They squabbled over long bathroom breaks. And once they started deliberating, they never wavered from their belief that Raj Rajaratnam was guilty of insider trading. Such was the life of jurors over 12 days of deliberations in a drab room in a federal courthouse near Manhattan's Foley Square, in the one of the most high-profile white-collar trials in American finance.

Tell Me Why I Should Care About Ending Insider Trading
Huffington Post | Marty Robins | May 14, 2011
Never having had any position in any of the stocks in which Mr. Rajaratnam was trading, I don't see how he cheated me. Even for those who did have such positions, I don't see how they were cheated. If they sold their shares in market transactions, they did so voluntarily without any prompting or misrepresentation from him. If they didn't sell their shares, there was no harm at all. Most fundamentally, why is a level playing field economically important or even desirable? Trading in stocks is by definition a zero sum game where one trader's gain reflects another's loss or foregone gain, but has no effect on the aggregate capital stock or output of society.