Financial Firms Brace For More Scrutiny

Financial Firms Brace For More Scrutiny - 2/3/2009

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Financial Firms Brace For More Scrutiny
Jacqueline Bell

Securities Law 360. February 3, 2009
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EXCERPT: With U.S. financial regulators under growing political pressure to step up their enforcement efforts in the wake of the Madoff scandal and the economic crisis, financial services firms are bracing for intensifying levels of scrutiny in the coming months. Experts say that while it's still difficult to predict exactly on what areas the U.S. Securities and Exchange Commission and other watchdogs will focus, the political heat regulators have faced in recent months will likely spark aggressive examinations, investigations and even new regulations. Richard Marshall, a partner at Ropes & Gray LLP, said that one of the most important things financial firms can do now is make sure they're not skimping on compliance, even as the financial crisis forces many companies to curb spending. “Many of the firms have tights budgets this year, but the best thing you can do today in order to avoid problems in the future is make sure you remain vigilant in your compliance program,” Marshall said. In addition, companies forced to lay off workers in the current economic climate should ensure they aren't losing important legacy knowledge about the organization, said William Sullivan, chair of the securities litigation and enforcement group at Paul Hastings Janofsky & Walker LLP. “Good housekeeping, good hygiene, on all of your compliance regimes will be very important,” Sullivan said. There can be little doubt that regulators are feeling the heat. A House hearing on the Madoff scandal scheduled for Wednesday morning will likely result in yet another grilling for a group of SEC officials who are set to testify after Harry Markopolos tells his story to the panel. Markopolos is a former financial executive who says he repeatedly tried to alert the SEC to the alleged $50 billion Ponzi scheme perpetrated by Bernard L. Madoff.

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