Tulsa World: Ex-SEC official speaks at TU on crisis

MAKE US YOUR HOMEPAGE | Tuesday, February 09, 2010 | WIRELESS

Home > Business

Newspaper View Print this story

Comment

RSS

Bookmark

Ex-SEC official speaks at TU on crisis

LACK OF ENFORCEMENT
Spencer C. Barasch: Former SEC Chairman Christopher Cox "grossly and materially interfered with the enforcement division's attempts to do their work. He put up a lot of roadblocks and bureaucracy. He slowed it down and made it more difficult for the SEC to do its job."

By LAURIE WINSLOW World Staff Writer
Published: 3/24/2009 3:29 AM
Last Modified: 3/24/2009 5:25 AM

Trying to unravel bailout legislation and understand the stimulus program is an arduous task for even those most schooled in the topic.

Spencer C. Barasch, a lawyer who once worked for the Securities and Exchange Commission, attempted Monday to explain the alphabet soup of legislative acronyms that have cropped up in the last year as the government tries to remedy the country's financial crisis, and what that effort means for corporate America.

"We can differ about causes of the crisis and solutions and how to get out of the crisis, but I would venture to say we would all agree we're in a recession or a crisis," he said in a speech at the University of Tulsa College of Law, from which he graduated in 1984.

Barasch is a partner at the Dallas office of the law firm Andrews Kurth. He leads its corporate governance and securities enforcement team.

Barasch spent 17 years with the SEC in several capacities, including directing its enforcement program in the Southwest.

Barasch offered his theories on how the country got into its financial crisis.

Some of the blame can be placed on a lot of the financial instruments that became popular but weren't regulated. They fell between the cracks and bright, enterprising people on Wall Street took advantage of them, he said.

Greed also is at fault. Success on Wall Street, Barasch said, is measured in one way — stock price. Ethics and building good products have nothing to do with it, he added.

Blame also rests with the SEC and other securities regulators who were asleep at the switch, Barasch said.

Many concur that former SEC Chairman Christopher Cox interfered with the enforcement process and was out of touch with Wall Street.

"He grossly and materially interfered with the enforcement division's attempts to do their work. He put up a lot of roadblocks and bureaucracy," Barasch charged. "He slowed it down and made it more difficult for the SEC to do its job."

Barasch noted, however, that the SEC has a great staff and it would not be fair to smear the entire agency based on Cox's performance.

The SEC has 4,000 staff members but is responsible for regulating 17,000 public companies, 34,000 investment companies and 8,500 registered broker-dealers, among other oversight duties. Many regulators are short-staffed and lack resources, Barasch said.

The government has responded to the crisis with a variety of legislation and programs aimed to stimulate the economy.

Among those is the Emergency Economic Stabilization Act, which created the Troubled Assets Relief Program, or TARP, which provides broad authority to the Treasury secretary to buy troubled assets of distressed companies. The Treasury Department is authorized to spend $700 billion to purchase troubled assets and preferred stock of distressed companies.

As of March 6, bailout funds had gone to 473 companies, including 323 public companies, Barasch said.

The American Recovery and Reinvestment Act, enacted last month, is a revised, more comprehensive version of the Stabilization Act. It provides new requirements for corporate governance and public disclosure of all companies that receive TARP money, he said. This is important legislation to which all companies should pay attention regardless of whether they receive TARP money, he said.

The legislation includes executive compensation measures that prohibit golden parachutes as well as bonuses, incentive awards and other incentive compensation to certain employees. It also prohibits compensation plans that would encourage manipulation of earnings.

"It requires TARP recipients to ask shareholders of their companies to vote to improve executive compensation," Barasch said.

The legislation also restricts luxury expenditures. The board of each TARP recipient will be required to have a companywide policy regarding "excessive or luxury expenditures." These may include spending on entertainment or events, office and facility renovations, and aviation or other transportation services, Barasch explained.

A proposed law — End Government Reimbursement of Executive Disbursements aims to end greed. It would allow the attorney general to claw back bonuses and review contracts to prevent bonuses from being paid.

The bill would apply to companies that received more than $10 billion in TARP funds after Sept. 1, 2008.

Laurie Winslow 581-8466
laurie.winslow@tulsaworld.com By LAURIE WINSLOW World Staff Writer

Newspaper View Print this story

Comment

RSS

Bookmark

Reader Comments

Show: Most Recent Comment First

Add your comment

0 comments have been made on this story so far. Tell us what you think below!

Reporting Comments

If you see a comment that violates our terms and conditions, please help us by clicking the "Report this Comment" link next to a comment. That will alert the web staff to review the comment. Thank you. -- Web Editor Jason Collington

Add Your Comment
In order to post a comment on this article, you must sign in to Tulsaworld.com. If you do not have a site account, you can create an account for free.