Winds of Change

by StockJockey

Tuesday, March 27, 2007 - 1:44 pm

Paul Atkins stint at the SEC has been marked by a few notable battles...he is a giant pain in the rear to fans of heavy handed regulation.

Like Bill Donaldson, for one.

February 2005
A firm believer in limited government, Atkins has harshly criticized SEC Chairman William H. Donaldson’s drives to regulate hedge funds, force mutual fund boards to have independent chairmen, and promise investors that the best prices will be protected when they buy or sell stock. Behind the scenes, Atkins increasingly balks at the heavy fines that the five-member commission metes out to corporate wrongdoers and wayward executives.

Indeed, his libertarian leanings might well save us from over-reaching regulators: Atkins makes no apologies. A libertarian, he believes the SEC should set disclosure standards, establish clear rules, educate investors, and nail fraudsters -- but steer clear of dictating business practices that are better left to markets. "Markets have great power to discipline people," Atkins told BusinessWeek. "We shouldn't try to second-guess them." Business Week/Feb 2005 Atkins is in Europe fighting the good fight...he is not asleep at the wheel with the U.S.'s share of global IPO's dropping from 57% in 2001 to 16% in 2006. Earlier this month, the Commission on the Regulation of U.S. Capital Markets in the 21st Century, a group organized by the U.S. Chamber of Commerce, issued its report with recommendations, including a substantial number of recommendations dealing with the policy and internal processes at the SEC. In January, Senator Charles Schumer and New York City Mayor Michael Bloomberg issued a report prepared by McKinsey Consulting on the state of the financial services industry in New York and the U.S. as a whole. The report made a number of recommendations related to the SEC. Last November, the Committee on Capital Markets Regulation, which is chaired by Glenn Hubbard and John Thornton and directed by Hal Scott, issued an interim report that similarly recommended specific reforms to be implemented by the SEC. As if this chorus of discontent was not enough, many of the SEC-related concerns found in the three reports were echoed - and even amplified - in a recent summit meeting of business and governmental leaders sponsored by U.S. Treasury Secretary Hank Paulson.

Although the perspectives and findings of each group were unique, there is a common thread of very important SEC-related issues among them. Among other things, each report recommended: (1) quick and substantial changes to the rules and guidance implementing section 404 of the Sarbanes-Oxley Act, (2) streamlined and coordinated regulatory processes that require meaningful cost benefit analyses, and (3) involvement jointly by the President’s Working Group (which is made up of the Secretary of the Treasury and the chairmen of the Board of Governors of the Federal Reserve System, the Securities and Exchange Commission, and the Commodity Futures Trading Commission) to provide transparency and predictability in the enforcement process.

We at the SEC cannot and should not ignore these findings and recommendations. We must clear the cobwebs and incorporate how the world has changed through technology and innovation when we consider whether to shed some of our weighty regulatory precedent. We need to ask ourselves a question that Secretary Paulson has recently posed: “Have we struck the right balance between investor protection and market competitiveness - a balance that assures investors the system is sound and trustworthy, and also gives companies the flexibility to compete, innovate, and respond to changes in the global economy?"2 The reports can help us answer this question.

I believe that the Commission is duty-bound to analyze, understand, and - if warranted - respond to each recommendation that pertains to us. Unfortunately, a coalition of contrarians - we can call it the “What-me-worry?” Crowd - has recently begun a campaign to mute the calls for action in the three reports. As I understand it, they contend that the U.S. capital markets are perfectly fine and that there is little haste needed to examine the calibration of our regulations and how we implement them.

Read the full transcipt of

Speech by SEC Commissioner :
Remarks at Finance Dublin
by
Commissioner Paul S. Atkins
U.S. Securities and Exchange Commission
Dublin, Ireland
March 26, 2007

here
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