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•Guest Column: Stock Market Crashes Bring Inevitable New Compliance Concerns

By Jerome M. Wendt and James Koopmann, DCIG LLC

Today's financial crisis is not the first one to occur and likely will not be the last. However like previous stock market crashes, such as in 1929, we can expect to see new legislation take effect. Out of the crash of 1929 came the passage of the Securities Act in 1933 and the Securities Exchange Act in 1934 which ultimately resulted in the establishment of the Securities and Exchange Commission (SEC) in 1934. Since then, the SEC has been actively involved in making changes of the financial regulatory system anytime financial crisis occur and it is safe to say this one will be no exception.

For proof of this, one only needs to look at a web page that the SEC has dedicated to tracking its actions during this crisis which illustrates the flurry of activities currently going on.

• The SEC is undertaking sweeping enforcement measures against market manipulation and aggressively combating fraud that has contributed to the subprime crisis and the loss of confidence in credit markets. More than 50 pending SEC investigations are in the subprime area.
• The Enforcement Division announced what will be the largest settlements in the history of the SEC for investors who bought auction rate securities from Citigroup, UBS, Wachovia, Merrill Lynch, RBS Capital Markets Corp. and Bank of America.
• The SEC brought a landmark enforcement action against a trader who spread false rumors designed to drive down the price of stock.
• The SEC charged two Bear Stearns hedge fund managers for fraudulently misleading investors about the financial state of the firm's two largest hedge funds and their exposure to subprime mortgage-backed securities
• The SEC charged two Wall Street brokers with defrauding their customers when making more than $1 billion in unauthorized purchases of subprime-related auction rate securities.

Click Here To Download:
•Guest Column: Stock Market Crashes Bring Inevitable New Compliance Concerns