The Securities and Exchange Commission (SEC), the principal regulator of U.S. financial markets, Tuesday held hearings on whether current oversight is adequate to protect investors.

The hearings focused on whether private companies that operate their own systems for buying and selling securities should be regulated as if they were actual markets. Maureen O'Hara, a finance professor at Cornell University, says technological advances allow securities to be traded almost anywhere at anytime. This, she emphasizes, makes the SEC a vital element in keeping markets fair and honest.

"The difficulty is that as we move forward into an era of increasingly privately owned trading systems, we need a central market cop to keep things even," she said. "So I would encourage the commission to recognize that their role is probably more important now than ever."

One new player in securities trading is Instinet, a trading platform owned by the Reuters news agency. Traders are able to trade on Instinet outside the regular business hours of traditional markets like the Nasdaq or the New York Stock Exchange. Bernard Madoff, who heads his own securities firm, doesn't believe new oversight is needed.

"I don't think the markets are in disarray," he said. "I don't think they're a disaster by any stretch of the imagination. I think what you're seeing is dislocation of certain markets, of certain participants in the market place. Quite frankly, that is what is supposed to happen and I think that is beneficial."

The entire securities industry in the United States is facing greater scrutiny in the wake of recent scandals involving dishonest accounting, manipulation of stock prices, and conflicts of interest within banks and brokerages. The SEC is itself being revamped and given greater power to regulate U.S. financial markets.