Highest level since 2007: Regulators cracking down on U.S. companies

(c) photo: freedigitalphotos.net

U.S. companies have to handle with more regulatory investigations in 2012 than in any year since 2007 referred to an annual report by Fulbright & Jaworski, a large national law firm. About 60 percent of U.S. companies hired outside counsel to represent them in such investigations compared to 55 percent in 2011 and 43 percent in 2010.

Fulbright said that one main reason of the rise of the investigations is the Dodd-Frank Wall Street Reform and Consumer Protection Act which was signed into federal law by President Barack Obama on July 21, 2010. It was the most sweeping legislative reform in the financial sector since the passage of President’s Franklin D. Roosevelt’s suite of reforms in the 1930’s. Dodd-Frank proposed eight areas of regulation, the major parts were (1) Regulate credit cards, loans and mortgages, (2) Oversee Wall Street, (3) Stop banks from gambling with depositor’s money, (4) Regulate risky derivates, (5) Bring hedge funds trades into the light, (6) Oversee credit rating agencies, (7) Increase supervision of insurance companies and (8) Reform the Federal Reserve. Inter alia the law gives new authority to the U.S. Securities and Exchange Commission (SEC) and other regulatory agencies.

Subsequent SEC attorneys have made a strategic decision to go lighter on suspected cases of insider trading. Prosecutors have always struck such deals with criminal suspects, but they were rare in the civil enforcement lawsuits that the SEC can file.

However the Americans can say that two years after President Barack Obama signed Dodd-Frank into law there are some notable successes. The financial markets are stronger than they were before the crisis and Americans can count on better consumer finance protection in their day-today interactions with the financial services institutions.

Author: Andreas Weitzell, Legal Trainee Charlotte Office