In-House Counsel

Wall Street Pearls

By Hanna

By now you’ve probably heard the news that two venerable Wall Street firms hit the skids this past weekend.  Merrill Lynch has a new Daddy in Bank of America and Lehman is the kid no one picked for their team.  They’ve now filed for bankruptcy.

In an interesting OpEd article, William R. Gruver ponders the impact of the 1999 repeal of the Glass-Steagall Act, the ensuing concentration of banking power, and how such concentration contributed to the current crisis on Wall Street.  He looks at the regulatory environment that failed to keep pace with market realities and notes: 

“We need a system that focuses on the prevention of crimes and crises . . . instead of aiming only for after-the-fact discovery and punishment.  Right now, the Securities and Exchange Commission conducts backward-looking audits, searching for past transgressions.  Instead, federal regulators should focus on guiding companies, helping them to adhere to sound principles of risk management and to avoid imprudent business practices”

Gruver’s regulatory recipe sounds like great advice for any type of self-regulation or business compliance effort.  After all, it’s always cheaper to learn from someone else’s mistakes and to anticipate problems before they occur than expect a bailout with unacceptable strings attached.  

So let the current Wall Street debacle provide some pearls of wisdom and ask yourself:  

1. What steps is my company taking to anticipate problems?
2. Could our compliance program use a little tune-up?  If yes, what are we waiting for?

Full post as published by Legal Literacy on September 15, 2008 (boomark / email).