More skeptical outlets wondered if the SEC would really follow through.

In my view what’s most noteworthy is the change in the market that has already occurred. The mere knowledge that the SEC has publicly begun legal action against Goldman Sachs has already established the following changes in the life conditions in the investing environment. All three of these effects are already working together to cause a sea change in the attitude of the investment market as the SEC action is digested:

First, in the upper left quadrant (individual/interior), other investment houses are now feeling pressure that they may be next and are thus incentivized to play more by the rules to avoid trouble.

Second, in the lower right quadrant (collective/external) the Market (meaning individual and institutional investors) are now aware that there is an ORDER component that may directly affect their bottom line, and will be choosing their investment options taking this into account, i.e., they don’t want to invest with an institution where they may lose money due to that institution’s unlawful behavior.

Third, in the lower left quadrant (collective/internal), the investment houses now feel their ORDER is being judged and rewarded (or punished) by the Market which they now understand will be looking for fair players and avoiding cheaters where to place their investments.

What is not expected to be immediate, but which I predict in the coming weeks and months, is an attempt by investment houses to position themselves in the market as fair–ORDERly–players, through advertisement and (hopefully) true action to better follow a healthy ORDER vMeme. This action is in the upper right quadrant (individual/external) and thus rounds out the present, brief 4Q analysis.

Whether the SEC follows through rigorously or not, their public statement and accusation has reestablished a sense that there is a standard (ORDER) that we all want each other to follow so that we are not taken advantage of by the other, and has articulated, perhaps for the first time since the S&L debacle, that our financial investment system has drifted from that standard.