The SEC seems to be haunted by the ghosts of debacles past. Past ghosts still haunting the SEC included the failure to discover Madoff multiple times over multiple years. The General Counsel, the Director of the Division of Enforcement and other senior staff refusing to tell Congress what happened with the Madoff inquiries, effectively taking the Fifth Amendment. The Stamford debacle, the computer porn disclosures and others just added to the ghosts of debacles past haunting the SEC.

Each time the Commission told Congress the event was in the past. Each time the Commission assured Congress the agency had learned from the experience and reformed. Each time the public that relies on the agency wondered if the ghosts were gone.

Last week a new ghost surfaced. This time it is a referral to the Department of Justice of a former SEC general counsel regarding possible criminal violations of the ethics statutes. The charges tie back to the ghost of Madoff. The former general counsel says he told the Chairman before he acted on certain Madoff matters, that an SEC ethics counsel approved and he did nothing wrong. The Chairman says she talked to the former GC about his Madoff link and he is a dedicated public servant. Congress and the public have again been told that the matter is in the past, the SEC has learned and new procedures are being put in place.

What happened in this latest scandal will ultimately be sorted out by the Department of Justice. What is important is the future of the agency. How many times should Congress accept a claim that its all in the past? Is the investing public suppose to believe that this time the agency is going to finally get it right?

Unfortunately repeated debacles and persistent ghosts undermine the assurances given to Congress and the public. More importantly, it also means the culture which spawned these repeated scandals and created those ghosts is wrong. It means the tone at the top which spawned that culture is wrong.

This is not to say that there are not many hard working and dedicated people at the Commission. There are. The fact that the work of the agency is moving forward and the public interest is being cared for and protected day after day is a testament to the dedication, skill, hard work and expertise of the hundreds of men and women employed at the agency.

Likewise, there is no doubt that the Commission in recent years has worked hard to move past the scandals and return to the days when the agency was considered among the best in government. Dozens of initiatives, regulations and cases have been brought. As new issues arise, congressional inquiries come in and the markets innovate new products and procedures, the Commission has moved to address them.

Tone at the top and culture is not however about how many new rules are issued or how much was paid in penalties. More rules have probably been issued in recent years than in any similar period in the history of the Commission. More dollars have been paid in fines and penalties that in any year in the history of the Commission. At the same time it might be good to recall that when the SEC was one of the best agencies in government with a highly regarded enforcement programs, it did not have authority to impose penalties. Its remedies were about halting violations and preventing their reoccurrence in the future. This suggests that tone at the top and culture are not about counting rule making initiatives, dollars of penalties or responding to the flavor of the week, month and year.

Tone at the top that flows down into a positive culture begins with the mandate of the statutes, congress and the public. It begins in the 1930s with the reasons the agency was created. It continues with the building of the reputation of the agency through the years by Commission members and staff who shared a vision, a concept, an understanding, an intuitive feel for the statutes and their meaning and how to implement them. Those people understood what it means to bring a new ethics to the market place. It began at the top, flowed down through the agency. What the SEC, and all those who rely on it need today, is a vision from the top rooted in the history of the agency and its mission to guide it back to being the best in government.