When someone asked former New York Mayor Rudy Giuliani how his administration successfully fought the soaring crime rate that had manifested itself under his predecessor and transformed the city into something resembling a John Woo action movie, he succinctly replied, “More cops.”
Well, truth be told, the foundation of his administration’s battle against crime was far more complex than that. Not the least of it was the deployment of new-age tactical strategies, developed by a cadre of very shrewd people, not all of whom, unfortunately, were given the proper credit in the end.
The battle against fraud requires no less manpower than battling for instance, armed robbery. It’s robbery to be sure, but without the specter of a 9mm or hunting knife pointed directly at your chest and an urgent suggestion that you surrender your wallet and jewelry.
And in lieu of sidearms and weighted batons, the “police” in this fight are the accountants and lawyers at the Securities and Exchange Commission.
For years, the regulator has been too underfunded and undermanned to effectively negotiate the thousands of documents on publicly traded companies that routinely flood its office. Its staff has suffered a high percentage of turnover compared to most government agencies and its salaries have also trailed other government institutions, making employment in the private sector an alluring alternative.
But the Bush administration has promised to literally double its annual budget for fiscal 2004, to $841.5 million, enough money the hire more than 800 accountants and attorneys and bring the staffing levels up to an acceptable tier.
Recently, House lawmakers made SEC Chairman William Donaldson’s job a whole lot easier – not to mention easing the burden on the agency’s overworked division of enforcement.
By a margin of 423-0, the House approved H.R. 658, the Accountant, Compliance, and Enforcement Staffing Act of 2003. The measure waives standard civil-service hiring procedures for SEC accountants, economists and examiners without sacrificing civil-service protections for new hires — a compromise hammered out with the National Treasury Employees Union, which represents SEC employees.
The financial watchdog already has an expedited hiring plan in place for attorneys. In essence it puts more cops on the street or, more accurately, on the fraud “beat.”
And while it might be a stretch to draw a parallel between the skyrocketing crime rate of New York circa 1990 and the accounting scandals that have broadsided the profession and the investing public over the past several years, if history has taught us anything it’s that you can’t bring a knife to a gunfight.
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