Update on current board issues: December 2012

Audit committee issues

SEC Chair Schapiro steps down

As Mary Schapiro leaves the SEC this month, it is not known who will be the long- term successor or when the commission will have five members again.

Elisse Walter, a commissioner who has stayed on past the June 2012 expiration of her five-year term, was named by President Obama to take over as chair. Walter is allowed by law to remain on the commission 18 months after her term expires (December 2013) or until she is renominated. She is considered to be among the candidates for the chair position on a more long-term basis [Read the SEC press release and Bruce Carton’s Compliance Week blog post for more on Schapiro’s resignation.]

"I want to express my deep gratitude to Mary Schapiro for her steadfast leadership at the SEC,” President Obama said in a November 26 statement. “When Mary agreed to serve nearly four years ago, she was fully aware of the difficulties facing the SEC and our economy as a whole. But she accepted the challenge, and today, the SEC is stronger and our financial system is safer and better able to serve the American people."

According to an SEC press release, during her tenure, Schapiro worked to bolster the SEC’s enforcement and examination programs, among others. As a result of a series of reforms, the agency is more adept at pursuing tips and complaints provided by outsiders, better able to identify wrongdoers through vastly upgraded market intelligence capabilities, and more strategic, innovative and risk-focused in the way it inspects financial firms, according to the release.

In another development, Meredith Cross, the director of the Division of Corporation Finance under Schapiro, announced she is leaving as of December 31. According to an SEC press release, Cross, who has served in that position since 2009, will return to the private sector.

FCPA resource guide released

The SEC and U.S. Department of Justice recently released A Resource Guide to the U.S. Foreign Corrupt Practices Act. [Read the press release here.]

The 120-page guide addresses a wide variety of topics covered by the FCPA's anti-bribery and accounting provisions, including the definition of a foreign official; what constitutes proper and improper gifts, travel, and entertainment expenses; facilitating payments; and how successor liability applies in mergers and acquisitions. It also includes hypotheticals, examples of enforcement actions, matters that the SEC and DOJ declined to pursue, and summaries of case law and opinion releases.

"The guide is an important illustration of our transparency and a useful reference for companies and individuals who wish to act responsibly and in compliance with the law," said Assistant Attorney General Lanny A. Breuer of the Department of Justice's Criminal Division.

Fraud risk is among boards' top concerns, according to the PwC 2012 Annual Corporate Directors Survey. Boards have taken such actions as discussing tone at the top (46%), increasing time spent on board discussions of risks embedded in compensation plans (38%), and interacting more with members of management below the executive level (31%).