Mark Cuban joins critics of SEC’s ‘broken windows’ policy

Wall Street to Mary Jo White: You have a "broken" policy.

Washington's war on the tiniest regulatory violations — modeled after the New York Police Department's "broken windows" policy — is drawing criticism from top investors, including Dallas Mavericks boss Mark Cuban, and former regulators who think that the SEC head is going too far.

"Here's why it doesn't work: If I walk up to a policeman in any neighborhood in America and say, 'if I throw a rock into a window and break it, is it against the law?' you know what he's going to say," Cuban told The Post.

Not so with securities laws.

"If you have a question about an SEC regulation and you want to know if it's against the law or not what do you do? There's nobody to call, and the SEC is vague and obtuse."

Cuban's comments on Thursday come one day after White's SEC charged 34 people and companies — the majority of them small-time investors — with being late to file one or more of several forms.

All told, the group was fined about $2.6 million.

The Securities and Exchange Commission claimed its "broken window" policy helped keep Wall Street in line.

But that kind of enforcement does more harm than good since securities laws are more complex than simple infractions, Cuban and other critics said.

Cuban, who fought and won a high-profile insider-trading case the SEC brought against him, recently uploaded a video to YouTube of his frustration with the regulator's byzantine policies for clearing up investor questions.

"No one understands what the law is," Cuban explained. "You can't have a broken window policy when nobody understands the law."

Until you define the law and make a bright line, the only ones who benefit are the lawyers at the SEC."

Wednesday's SEC action stands in stark contrast to major regulatory actions this year, including $7 billion in penalties and fines against France-based BNP Paribas for acting as money launderers for terrorist regimes, and almost $17 billion against Bank of America for its role in the financial crisis, the largest fine for a single company ever.

Smaller companies are hurt the most by this "broken window" policy since they won't have a flexible budget to beef up their compliance staff, said Linda Riefberg, the former chief counsel at the Financial Industry Regulatory Authority's enforcement department.

"Smaller firms are naturally going to feel more of a pinch in increased compliance and regulatory oversight simply because they have less revenue to allocate to that purpose than a large firm," Riefberg, now a partner at law firm Cozen O'Connor, told The Post.

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