This is the first in a series of articles that will be published periodically analyzing the direction of SEC enforcement.

The Securities and Exchange Commission was born of scandal, created by congress in the wake of the 1929 market crash. The hearings which lead to the creation of the agency chronicled swindles, frauds, rigged deals and other fraudulent tactics of a shadowy Wall Street. It was an insider’s game. Main Street investors had little chance in the dark, unsavory environment.

The Commission’s mission was to bring a new ethics to the market place. The primary method was and remains disclosure. The idea is to furnish investors with the information they need to make an informed decision, not tell them how to invest. The Commission was charged with crafting appropriate regulations to foster the disclosure of the necessary information and policing the markets for all investors.

For a considerable period of time the SEC enjoyed a well deserved reputation as one of the best regulators in government. Its Enforcement Division, created by legendary securities regulators Irving Pollack and his successor Stanley Sporkin, was generally considered to be one of the most effective in government.

As the recent market cash unfolded all this changed. The impact of years of deregulation and no regulation became apparent. Suddenly everyone was reading about esoteric financial products which few even on Wall Street understood. CDS, CDO, synthetic securities and an alphabet soup of esoteric financial products became the topic of conversation not just on Wall Street but on Main Street. Many tried to understand the role of little known credit rating agencies. Stories emerged about investment vehicles crafted more as wagering enterprises fit for a Las Vegas casino rather than as an investment in a business.

For the SEC the crisis was more than one about regulating the markets. The agency itself became a central cause for concern and criticism. As the market crisis spun nearly out of control, tales of failure and scandal about Wall Street’s once vaulted regulator emerged. People on Main Street who once thought the letters SEC stood for “South East Conference” suddenly learned they meant “Securities and Exchange Commission” and wondered why the agency failed to protect them. The once highly respected and perhaps feared Enforcement program was charged with being ineffective and inept. The agency became the target of law suits filed by investors claiming it failed to protect them from fraudsters such as Bernard Madoff and Robert Allen Sanford.

Suddenly the Commission, in many ways, found itself in the same position as its 1930s predecessor. Again the agency had to try and regulate markets which many believe are rampant with speculation, little more than an insider’s game. Again the faith of the investing public had to be restored in the fundamental fairness of the markets. The task is complicated by the fact that the Commission had to rebuild its own tarnished image.

Now as the country emerges from the worst market crash since the 1930s it is appropriate to not just assess the state of the SEC but query where the agency and its enforcement program is headed. The answer to this question is critical for issuers, directors, officers, regulated entities, investors and the securities markets.

Clearly significant steps and progress has been made. New Commissioners have been appointed. Dozens of new regulations have been issued. Many more have been put out for comment. More are on the way. Congress has given the SEC more authority in the Dodd-Frank Act as well as new directives to write even more regulations. Yet some claim the Commission is not adequately protecting investors and the markets.

The Enforcement Division, lead by a new director and his team, has worked diligently to reinvigorate the program. The largest reorganization in history has been completed. New personnel have been added. New positions created. New initiatives to facilitate and speed investigations have been announced.

These efforts are reflected in high profile successes. Settlements in cases such as Goldman Sachs, Mozilo and others have garnered the division much deserved headlines. Yet other cases such as Bank of America and the loss in the Rorech CDS insider trading action raise significant questions about the program and its direction.

This series will assess the state of SEC enforcement and its direction in 2011 and beyond, reviewing recent initiatives and cases and projecting future trends. A range of topic will be analyzed from the new authority under Dodd-Frank and the reorganization of the division to the impact of the increasing criminalization of securities enforcement. It will conclude with an overview of future trends and directions.

Next: Market reform and reorganization.