By now, the Securities and Exchange Commission's newly-minted Chair Mary Jo White must be inundated with advice on how to succeed at her job from sources near and far.
Well, here's one more gem of an advice letter that was most recently sent by John Walsh, a partner at Sutherland Asbill & Brennan and former acting director of the SEC's Office of Compliance Inspections and Examinations.
In the letter, Walsh initially welcomes White to the SEC and follows it up with: "By this point, you may be wondering why you agreed to serve. Trust me: after your first few months in office, it gets worse."
Getting down to the nitty gritty, Walsh notes that compliance officers don't always get the proper treatment that they deserve from the SEC. "Given compliance professionals' role, one would expect the Commission to admire, favor, and support them. Unfortunately, in recent years, many compliance professionals believe they have been under assault," he wrote.
So when White's staff brings her an enforcement recommendation against a compliance professional, Walsh urged her to beg the question: "Did he or she engage in affirmative misconduct?"
Walsh also urged White to protect her regulatory tools by choosing wisely between "a quiet phone call to encourage someone to do the right thing" to "nonpublic admonitions in an examination letter" before moving to the dreaded enforcement action.
Also, the SEC should restore its ability to require respondents in enforcement actions to undertake remedial action, according to Walsh. This entails requalification, mandatory training programs, improvements to policies and procedures, restricting business, and enhancing disclosures, among others. "Remedies are teaching moments," he wrote.
Finally, and perhaps most importantly, Walsh advised the current Chair to not get into the bad headline chasing habit of setting enforcement records because "As soon as you announce a record, your motives will be suspect."
Rather, Walsh suggested that when White's staff brings her a case against people so evil that they should be left "naked, homeless, and without wheels," she should turn the case over to the propoer authorities who can put those people in jail.
"As a civil regulator, you have other things to do," he surmised.
