One year after the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, corporations that were bracing to be hit by wave after wave of regulations are still wondering when the initial impact of the bill will be felt. For all the fear that Dodd-Frank would leave corporations scrambling to make major changes to their existing governance models, most organisations haven’t broken much of a sweat.
The broadly written and extremely vague language in the 2,300-page financial overhaul legislation has most corporate secretaries and governance professionals making just enough adjustments to be in compliance with the law whenever regulators actively begin implementation. Attempts to repeal the legislation’s whistleblower provision and requests for more clarity on other measures have created questions about which companies will be affected most, and to what degree.
But companies in the financial
services industry, in industries that strongly rely on financial services industry products (such as derivatives and swaps) and in industries that are particularly
vulnerable to fraud and corruption are likely those most concerned about making changes under Dodd-Frank.
The primary objectives of the reform bill are to prevent another financial system meltdown and to ensure the US government won’t have to bail out companies and financial markets. The hope is that tighter regulations will increase transparency and reduce systemic risk across industries, so companies that have been practicing good governance all along are seeing the measures as business as usual. ‘While the Dodd-Frank legislation covers a lot of ground, we believe it to have limited impact on our governance structure,’ says Pfizer corporate secretary Matthew Lepore.
Lepore, who is also vice president and chief counsel of Pfizer’s corporate governance department, says adjusting to the recent reforms from the federal government are just a regular part of his ever-changing responsibilities as a corporate officer. ‘We regularly update the board of directors on the governance aspect of Dodd-Frank,’ he says. ‘Even before Dodd-Frank, there was the Shareholder Bill of Rights, and since then we made it our duty to ensure the board was prepared to deal with the impact of this bill.’
Robin Smith, general counsel for the Americas
at toy manufacturer Lego, says the law’s broad
implications are just part of adjusting to the new
regulatory landscape. After all of the financial scandals of recent years, tighter scrutiny was inevitable.
‘The only real difference for us [after Dodd-Frank] is PwC being stricter in its audits of us and our financials as a privately held company,’ says Smith, adding that PwC ‘is holding us to public company standards – which is fine, because we ensure our company upholds its high standards, anyway.’
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