Stepped-up rulemaking, enforcement: keeping SEC busy.

• Author: Heffes, Ellen M.
• Position: Financial Reporting - U.S. Securities and Exchange Commission - Interview - Interview

The U.S. Securities and Exchange Commission (SEC) is busier now than it's been since its inception in the 1930s, with much of its increased activities due to stepped-up rulemaking and enforcement. Commissioner Harvey J. Goldschmid spoke recently with Financial Executive's Managing Editor Ellen Heffes about the SEC generally--its role, current activities and also some specifics on what registrants can expect going forward.

Goldschmid is one of five commissioners (including the chairman), who are appointed by the sitting president so that the majority of commissioners are of the same political party that is in office.

An attorney, Goldschmid is on leave from Columbia University School of Law, where he is Dwight Professor of Law. He also served as SEC General Counsel (the SEC's chief legal officer) from 1998-99.

In the full interview on FEI's Web site, Goldschmid discusses the recent SEC mutual fund rulings, its proxy access proposal and more. Read it all at: www.fei.org/mag/articles/9-2004_fr.cfm.

You have called the SEC the "gate-keeper to make the system work." What is your opinion on how effective the SEC has been, and how different is it under Chairman William Donaldson?

HG: The way to think of the SEC today is to ask the question, "Has it ever been busier or in the public spotlight as much as it is now?" The scandals of the late 1990s and early 2000s have been the most serious since the Great Depression. And, not surprisingly, this has been the most active period at the SEC, with the possible exception of the years around 1934, when the Commission itself was formed, and it had to establish new rules and procedures.

The need for this activity has obviously been demonstrated by what went wrong in the public corporation in terms of Enron, WorldCom and others, and what we discovered to be wrong in the mutual-fund area. But there has generally been a need to rethink a number of major areas of concern for the SEC--some caused by scandals, some by just the need for rethinking.

The self-regulatory scheme for stock exchanges certainly had to be looked at in light of certain problems that we've found; and, in general, how people trade--the mechanisms for trade--and the rules for trading on exchanges simply needed review.

In terms of the Commission historically, there are ebbs and flows in its quality. When teaching at Columbia, I've often said that the SEC has been the best of the federal administrative agencies, and I believe that remains true...