MANAGING YOUR COMPANY’S REGULATORY EXPOSURE
RC: To what extent are today’s businesses operating in an environment of intense regulatory scrutiny and increased enforcement? Has this situation changed in recent years?
Dietz: Virtually all businesses face intense regulatory scrutiny and increased enforcement activity. Certain industry sectors, such as financial institutions, oil and gas, and healthcare, have long functioned in a regulated environment with active government enforcement but even in those sectors, enforcement activity has accelerated. Other business sectors have seen increased activity over the past 10-plus years for a variety of reasons, including passage of key legislative initiatives such as Sarbanes-Oxley and Dodd-Frank, an emphasis on FCPA and global anti-corruption enforcement and import-export controls. Also, there is a definite upswing in anti-money laundering enforcement activity and in enforcement of the Fair Credit Reporting Act. There is no going back to an era of lax enforcement.
Beaumier: A survey we recently conducted of some 400 C-level executives across every major industry sector rated regulatory risk as the top risk for the second straight year. The pace of regulatory and legislative change has been significant in recent years. For example, since the financial crisis, regulatory reforms in financial services have been broad and varied and have included consumer and investor protections, new capital and liquidity requirements, and restructuring of the derivatives and mortgage markets, to mention but a few areas of reform. And the reforms are far from complete. In the United States, about 40 percent of the Dodd-Frank Act is yet to be implemented. New, complex financial reform regulations are still being rolled out in Europe and a host of other regulations are being issued by other jurisdictions. These developments are stretching the capacity of risk and compliance personnel in the industry.
Jan-Mar 2014 Issue
Bass, Berry & Sims PLC
Weil, Gotshal & Manges LLP