Our Boston bank attorneys continue to monitor issues arising from the so-called “reforms” passed by Congress. In this case, Congress promised a huge funding boost but has failed to pass a budget, which has left the SEC scrambling. In the wake of the Bernie Madoff scandal and the economic meltdown, regulatory agencies are under more pressure than ever.
Yet the lack of funding means banks and industry professionals may face scrutiny by an agency without the proper resources to ensure fairness and accuracy. In still other cases, consumers may be left without the protection promised in the wake of reform.
The Dodd-Frank Act set up a whistleblower office at the SEC, which cannot hire or even fill vacancies. For now, the agency is staffing it by borrowing resources from the enforcement division, which could lead to inadequate investigative resources. And the personnel being imported are not necessarily the best for the job. CNN reports that Stephen Kohn, the director of the National Whistleblower Center, likened it to filling a baseball team with hockey and football players.
And it’s not as if the SEC was on top of its game before the crisis: It had been warned about Madoff numerous times over a period of 16 years and failed to stop him from perpetrating the biggest financial fraud scheme in U.S. history.
Democrats accuse Republicans of gutting the budget to take the teeth out of new financial regulations; Republicans counter that more money is not the answer. “Unfortunately, over the last decade the SEC’s budget has nearly tripled, yet it has repeatedly failed to stop the most egregious cases of fraud,” said Republican Ed Royce.
The Boston business attorneys at The Brown Law Firm, LLC, represent businesses and banks in employment issues, contract matters, and business disputes. For a no-cost, confidential consultation, call (617) 489-0817 or contact us through this website.