Miron on the SEC

My libertarian friend Jeff Miron opines today on corporate governance. He says that the Sarbanes-Oxley law is overly burdensome, which is probably true. He says that the corporate income tax should be repealed, an argument I can understand. But he loses me when he says the SEC should be abolished. Jeff writes:

Eliminating the SEC would make investors bear full responsibility for monitoring corporate behavior. This occurs to a substantial degree already, since the SEC cannot effectively monitor all the firms subjects to its regulations. But eliminating the SEC would spur additional private monitoring and strenghten investor incentives to engage in due diligence.

If Jeff is right about the SEC, then maybe his next post should be the following:

Eliminating the police would make people bear full responsibility for protecting their own safety. This occurs to a substantial degree already, since the police cannot effectively monitor everyone who might commit a crime. But eliminating the police would spur additional private monitoring and strenghten individual incentives to engage in due diligence.

I have sympathy for many libertarian arguments, but abolishing the SEC seems at least one step too far.

Update: Jeff responds.