It’s the primary axiom of corporate compliance: A new rule emerges over the horizon, companies ignore it until the rule’s arrival is imminent, and then they panic and scramble to implement a compliance regime as quickly as possible. The Securities and Exchange Commission seems to be following a similar pattern.
Stronger enforcement is now the order of the day at the SEC. After years of soft-pedaling enforcement under the Bush Administration, the agency has gone into overdrive with all manner of new plans, new funding, and new promises to crackdown on offenses. For an overview of what’s coming, I’d suggest reading the column by our legal writer, Bruce Carton, on pages 20-21; he has some excellent commentary from sources inside the SEC Enforcement Division.
Beyond those specifics, however, we’re seeing a broader base of support in Washington for more funding to the SEC, FBI, Justice Department, and other agencies to help them combat white-collar fraud. SEC Chairman Mary Schapiro has promised more enforcement every time she visits Capitol Hill. And powerful people like Sen. Charles Schumer of New York are promising to support her in the only way that counts: with appropriation bills. The Senate approved $40 million in April to boost SEC enforcement, and more is surely coming.
None of this should be a surprise. For too long, the United States wasn’t compliant with its own expectations of how the public markets should work. The financial crisis shows the due date has arrived. The SEC is scrambling to remediate its deficiencies now. And while that’s a challenge for Corporate America, it is a good thing.
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