March 25, 2011
Congress and the SEC’s Budget: Desperately Seeking Mary
One of my favorite movies from the ’80s was “Desperately Seeking Susan” and not because I played with Rosanna Arquette in the sandbox when I was a tot or because Madonna was tremendous in the movie. It was just a great movie.
With Congress placing a big fat target on the SEC’s backside, the movie came to mind because they have called SEC Chair Mary Schapiro to testify so many times in recent weeks that I’m not sure I can accurately count them all (try counting them for yourself; see Dave’s recent blog on the budget fight). It’s clear that Congress intends to defang the SEC as much as it can – and it surely couldn’t come at a worse time given all the Dodd-Frank rulemaking it has on its plate (not to mention a lack of agency resources and the fact that the recent financial crisis is not in the distant background yet).
I certainly agree that the SEC can be improved, but how does Congress really expect senior management over there to do anything when they need to spend all their time testifying (or prepping to testify)? It’s beyond ridiculous. And it certainly sends the wrong message to mainstream journalists who don’t know better and feed hungrily off the “news” it gets from SEC Inspector General David Kotz, who has become too important in the eyes of those outside the agency. An all-powerful IG can’t be good for anyone in my opinion.
A member sent me this blog from the Project on Government Oversight entitled “SEC Employees Cited for Misconduct Rarely Face Punishment” along with this note:
The parallel of this to corporate whistleblowing is likely lost on POGO (and Congress). The rare exception (an actual violation) defines the rule and drives the process. Lots of noise, not much substance. Many complaints motivated by office politics. A presumption of organizational guilt (because organizations are perceived to be inherently bad). If the organization doesn’t investigate every allegation, it will be criticized – even though it’s demonstrably a poor use of scarce resources. Imagine if police work was done in the same way. They’d need to formally investigate every crackpot allegation.
Maybe Don Henley’s “All She Is Forced to Do Is Testify” is a better analogy…
A Word about David Becker: End the Witch Hunt!
And don’t get me started about the recent Congressional hearings (with more hearings to come) about former SEC General Counsel David Becker and his deceased mother’s Madoff investments. I’m not going to even bother reciting any of the outlandish claims made in a frivolous lawsuit or the theater that Congress is now engaged in. I’ll just note that David returned to the SEC in a time of need to serve his country two years ago – leaving a handsomely paid partnership – and this is how he is repaid? I guess no good deed goes unpunished.
Talk to anyone who has real knowledge about the SEC (not the mass media who refers to David as a former “chief council”) and you’ll not find a single person who doesn’t think that David is among the most honorable people you’ll ever meet.
Sorry for all the Friday ranting. Just had to get all this stuff off my chest. Back to straight reporting next week. And a side note: the SEC yesterday hired Anne Small as Deputy General Counsel – Anne hails from WilmerHale, one of many that have been hired from that firm during the past decade or so (egs. Meredith Cross, David Becker, Steve Cutler, Mark Cahn, Joseph Brenner).
More on “The Mentor Blog”
We continue to post new items daily on our blog – “The Mentor Blog” – for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:
– Expanded Whistleblower Regulations: A Potent Combination of IRS Strategies
– SEC’s Enforcement Provides Further Guidance on Cooperation Credit
– Board Communications: Using “In-House” Director Email Addresses
– FASB & IASB Joint Exposure Draft: Offsetting Assets & Liabilities
– Shortcomings of Chinese Listings in the US
– Broc Romanek