The 'new' SEC: time for self-evaluation?

• Author: DiFabio, Christine
• Position: Washington insights - Securities and Exchange Commission

During the eight years of President Bill Clinton's term, Arthur . Levitt stood constant at the helm of the U.S. Securities and Exchange Commission as chairman. However, that same length of time--the presidency of George W. Bush--witnessed three chairmen: Harvey Pitt, William Donaldson and Christopher Cox.

Each left his own unique mark on the commission; even those who were in the role for a short while. Currently under debate, however, is the legacy of Chairman Cox, just months after he left his post.

Regardless of personal views on Cox's term, there are several common observations that now resonate regarding his term. Cox was passionate about interactive data and mandating the use of extensible Business Reporting Language, (known as XBRL); and he favored the U.S. moving to one set of global accounting standards, potentially International Financial Reporting Standards.

Another point, which focuses less on his agenda and more on what has been considered hindsight--in light of the current state of the economy--is that Cox should have been tougher in enforcement and regulation, both internally and externally, an opinion Cox would likely disagree with.

In an interview in Financial Executive last fall, he indicated the SEC in 2008 and '09 had the largest enforcement budget in its history and under his tenure had set records for the greatest number of corporate penalties.

If he'd been tougher, where would we be today? Would we, perhaps, even be in the exact same place?

Considering the SEC of 2009, however, there is one very clear observation that has emerged after less than three months with Mary Schapiro as chairwoman; change is imminent.

In early February, Chairwoman Schapiro addressed attendees at the Practising Law Institute's "SEC Speaks in 2009" program. She made the following observations, which set forth the commission's focus for 2009 and beyond:

"As the current market crisis has unfolded, the SEC, along with the entire regulatory structure, has been put under a microscope. This crisis has exposed weaknesses and gaps in the regulatory system and areas where the SEC particularly must re-commit its resources and talents in order to restore investor confidence.

"We must help to restore that lost confidence--that is our challenge.

"Success in this endeavor demands that we as an organization engage in serious self-evaluation. That means taking an honest look at everything we are doing and how we do it. I know there is so much being done...