10:09 a.m., March 22, 2010----“One size does not fit all” was the key message delivered by John W. White, former director of the Division of Corporate Finance at the U.S. Securities and Exchange Commission (SEC), during a presentation on current SEC proposals regarding corporate governance on Tuesday, March 16, at the Wilmington Club. He also shared his views on financial reporting reform and other current issues.

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The talk was part of the John L. Weinberg Distinguished Speakers Series sponsored by UD's John L. Weinberg Center for Corporate Governance.

White began by reviewing the proposed corporate governance amendments currently being discussed in Congress and by the SEC, and related those proposals to the amendments that came after the economic crisis of the early 2000s.

“If we talk about then and now,” said White, “the 'then' would be the crisis of 2001-02, which dealt most notably with the Adelphi, Tyco, WorldCom, and Enron situations.

“I would suggest that what happened back in that last crisis was a breakdown in financial reporting and disclosure. To some degree, people would say it was due to weak and inattentive boards and that was certainly true in some cases, as well, but the breakdown in financial reporting and disclosure was the most notable piece of the crisis.”

White explained that the regulatory response to that crisis came from Congress in the form of Sarbanes-Oxley and the SEC, and a variety of implementations by Sarbanes-Oxley of its own provisions as it attempted to put into place controls to make financial reporting more reliable.

“Now I would suggest we have a somewhat different crisis,” said White.

Describing such issues as the collapse of the subprime market and problems with credit default swaps, White analyzed whether the remedies being proposed now are the right remedies for today.

Specifically, White noted that while there are many good ideas in the current proposals -- including Sen. Christopher J. Dodd's bill, which would, among other things, eliminate the “private adviser exemption” from SEC registration under the Investment Advisers Act of 1940 -- it is questionable whether enforcement should be dictated from Washington, D.C., versus by individual corporate preference.

White questioned whether the financial crisis of today would have happened if the current proposals had been implemented as remedies to the crisis of the early 2000s. Citing the economic crisis in the United Kingdom, White suggested that mandates such as proxy access, declassified boards and enforcement by the SEC would not have resulted in a very different outcome.

White concluded by saying he would prefer to see proposals tailored to individual corporations rather than a “one size fits all” approach.

After White concluded his remarks, Roger Coffin, associate director of the Weinberg Center and professor of finance, presented White with a certificate of appreciation.

White is a partner in the corporate department of Cravath, Swaine, & Moore LLP, where he is co-chair of the corporate governance and board advisory practice. From March 2006 through December 2008, he served as director of the Division of Corporate Finance at the SEC, the division responsible for overseeing disclosure and reporting by public companies within the United States.

The John L. Weinberg Distinguished Speakers Series was developed as part of the center's initiative to bring discussion about current, relevant corporate governance topics to the public by providing a forum for business leaders, members of corporate boards, the legal community, academics, practitioners, graduate and undergraduate students, and others interested in corporate governance issues to meet, interact, learn and teach.

Visit the new Weinberg Center for Corporate Governance blog for updates, podcasts and future event information.

Article by Kathryn Marrone
Photo by Evan Krape