For the last year, the SEC has been reinventing and rejuvenating itself. The Commission and the staff have been busy with new proposals new initiatives and reorganizations. Many of these proposals, programs and initiatives appear very positive. At the same time, there are questions.

Consider the initiatives. The SEC recently asked the Senate Banking Committee, for example, to strengthen the standards for broker-dealers giving investment advice to match those of investment advisers, according to a report by Dow Jones. The Chairman sent a letter to Senate Banking Committee Chairman Christopher Dodd and ranking Republican Richard Shelby requesting that the financial reform bill include a provision which has a uniform fiduciary stand of conduct for financial services professionals giving financial advice. The Administration’s initial proposals for financial reform called for the adoption of such a standard. The current draft of financial reform legislation emerging from the Senate Banking Committee omits such a standard, but calls for a study of the question by the SEC as discussed here.

Ms. Schapiro’s letter is one of a series of aggressive steps being taken to move the agency forward. Earlier, Ms. Schapiro and the Commission pushed for financial reforms proposed by the Administration which would significantly augment the SEC’s authority. Those include extending regulation to the OTC derivatives, a cause championed by the CFTC Chairman, and the regulation of hedge funds. Under Ms. Schapiro, the Commission has also either passed or issued for comment a long list of rules and proposals regarding issues on a wide variety of topics ranging from corporate governance to short selling.

At the staff level, a new director has taken over who is emphasizing more aggressive and speedy enforcement. Procedures have been streamlined to speed the process. Now, the Director can authorize the initiation of a formal investigation and institution of a subpoena enforcement action without going to the Commission for authority.

What is being billed as the most sweeping reorganization of the Enforcement Division in years is underway. Management positions have been eliminated to put more “boots on the ground.” New specialty units have been created to add expertise to the Division. New proposals on cooperation largely borrowed from DOJ have been penned into the Enforcement Manual in an effort to secure the cooperation of individuals and companies to speed investigations and perhaps avoid the painstaking and time consuming document analysis which SEC investigations traditionally require.

These initiatives and others all suggest a new day is dawning for the SEC. There are however warning signs on the horizon that raise troubling questions. SEC v. Bank of America, discussed here, is one. To be sure, the court recently agreed to sign the consent decree resolving the case. Approval only came however after the initial settlement was rejected, the Commission’s investigation was called a sham and the agency was accused of being in bed with those it is suppose to regulate. In the end, although the court agreed to approve a modified deal, its opinion made it clear that the approval was reluctant and the settlement was anything but adequate.

Before the ink is dry on that consent decree, new questions are being raised about yet another significant enforcement action involving major Wall Street players. This time the issue comes from a case settled years ago which resolved the Commission’s enforcement action against several Wall Street players. The allegations there were that the defendants had permitted the investment banking side of their operations to influence the research side and the reports issued which were supposed to be independent were not. SEC v. Bear, Stearns & Co., discussed here. Last week the court rejected a proposed modification to a consent decree advocated by the SEC and the defendants which have taken down part of the procedures put in place to prevent a future repetition the wrongful conduct. Quoting a former SEC Chairman, the court stressed the necessity of the procedures to protect the public interest.

Now, the SEC is in damage control mode. It issued a litigation release emphasizing the fact that other requested modifications to the Bear Stearns decree were approved by Judge Pauley. See Litig. Rel. 21457 (March 19, 2010). While this is true it does not change the fact that for the second time in a brief period a court has stepped in to protect the public interest which the agency is supposed to protect and rejected an SEC proposed in an enforcement action.

These conflicting strains raise significant questions about where the Commission is heading. Legislative proposals for more authority and new rules can be beneficial. Reorganizations can streamline operations and provide efficiency. The question, however, is does all this mean that Commission simply rearranged the chairs on the Titanic or is the ship actually steaming in the right direction?