Commentators have speculated since the appointment of
Mary Jo White as SEC Chair that there would be a new emphasis on enforcement.
Ms. White's remarks during her Senate confirmation hearings about unrelenting
enforcement bolstered that view. Yet her recent remarks suggest perhaps another
"[W]e are not alone in the global regulatory space . . .
" Ms. White declared in her first formal remarks as SEC Chair. Addressing the
Investment Company Institute General Membership Meeting in Washington, D.C. on
May 1, 2013 Ms. White focused on what she called "Regulation in a Global
Financial System," In her remarks the new SEC Chair painted a picture of a
global market place in which the Commission is but one regulator among many,
working carefully and diligently with its international counter-parts to craft
regulation that protects all types of investors. Building on this theme Ms.
White told the ICI membership that "our duty to the investors, entrepreneurs,
and other market participants who rely on us means that we must find common
ground with our counterparts abroad, collaborate on everyday matters like
enforcement and accounting, and knit together a regulatory network that offers
protection, consistency, and stability to market participants . . . " in the
U.S. and abroad because in the end what "happens overseas matters here at home,
and matters more every day."
Building on this theme the new SEC Chair went on to give
several examples of this approach:
Last week the Commission proposed new securities based swaps rules for
cross-boarder transactions. Echoing a theme from her confirmation hearings
where she promised to finish the rule writing tasks under this statute, Ms.
White went on to suggest that this proposal is the beginning of finalizing that
work: "This proposal is so important not only because it recognizes the global
nature of derivates, but because it is a linchpin in our efforts to finalize
the new regulatory regime for our portion of the massive, global market that we
Money market funds: The
mutual fund industry is a "clear example of financial globalization and the
scope of the regulatory challenge we face" Ms. White declared, noting that the
ICI has acknowledged this point. Turning to one of the more contentious issues
before the Commission in recent months - the regulation of money market funds -
Ms. White suggested that a new approach may be under development. Previously
then Chairman Schapiro was unable to secure the votes to even propose a new
regulatory regime for these funds despite months of discussion and study and a
staff paper on the issue mandated by Dodd-Frank. Now Ms. White declared that
"[a]s the SEC works to develop and propose meaningful money market fund reform,
our goal is to preserve the economic benefits of the product while addressing
potential redemption pressures and the susceptibility of these funds to runs .
. . " The result of this process will be proposals grounded in sound economic
analysis and well informed by public comment that incorporated the diverse
views of the Commissioners and which should lead to "a good, investor-oriented
result that has been informed by and can be shared with other regulators in the
enforcement is also a function of collaboration in the global market place. To
this end the Commission is now one of 94 signatories to the IOSCO Multilateral
MOU which, the Ms. White stated, "creates a seamless web of securities
authorities that are empowered to use their respective enforcement tools on
each other's behalf." One example of this is the cooperation secured from Hong
Kong authorities in a large, recent insider trading case that permitted the
Commission to rapidly identify a trader. Another is the cross-boarder working
group which utilizes "proactive analytic techniques" to "confront the
increasing number of foreign-based issuers who seek to turn their isolation
into opportunities for fraud." A key focus here has been issuers from the PRC
which have engaged in fraud and other violations. The result has been numerous
cases against PRC based issuers involving manipulation, accounting and
disclosure issues and auditor misconduct.
FCPA: The fact that
wrongful conduct flows both ways across boarders in one reason that
international cooperation is imperative, the new SEC Chair declared. "Among the
most prominent concerns in this regard is bribery by U.S. companies overseas .
. ." Here the SEC's "first objective" is compliance through education Ms. White
declared which is the reason the SEC and the DOJ published their Guide to the
FCPA last year. Another key point in this area is cooperation, illustrated by
the recent non-prosecution agreement entered into with Ralph Lauren
Ms. White concluded by emphasizing what may be the future
direction of the Commission, noting that "enhancing our profile as a globally-focused
regulator is an ongoing priority at the SEC." This means that the agency must
accommodate "jurisdictional differences while promoting high standards . . .
[which will require] weaving international concerns into even the most
seemingly domestic rulemaking or policy . . ."
ABA Seminar: Fifth
Annual FCPA Update: Protecting Your Business in the Future: Lessons from the
New DOJ-SEC FCPA Guide, June 19, 2013 from 1:00 -2:30 p.m. EST. The discussion
will focus on building effective compliance systems and conducting M&A due
diligence. Co-moderators: Thomas Gorman and Frank Razzano. Panel: John Buretta,
Principal Deputy to the Assistant AG, DOJ; Charles Cain, Assistant Director,
FCPA Unit, SEC Division of Enforcement; Catherine Razzano, Assistant General
Counsel, General Dynamics Corporation; Steve Siegal, Senior Counsel, Northrop
Grumman Corporation; Ryan Ong, President, U.S. China Business Counsel. Live in
Washington, D.C at 600 14th St. N.W., Penthouse (no charge for ASECA
members attending live in Washington who pre-register by sending an e-mail to
firstname.lastname@example.org). Webcast Nationally by the ABA. For further
For more commentary on developing securities
issues, visit SEC Actions, a blog by Thomas
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