September 29, 2010
I have been one of two full-time corporate ombuds at DOE's largest national security laboratory for 14 of the 18 years the office has been chartered. I encourage the SEC to base its new ombudsman program on the International Ombudsman Association Standards of Practice and Code of Ethics. These are cornerstones of an effective, high integrity organizational ombudsman program. They are critical to setting up the program. For example, as described, the upward reporting relationship may serve to fit in the SEC structure but sacrifices the perception of neutrality. Reporting/management lines established for the ombudsman are inherently statements that will influence perceptions of real neutrality to the constituencies SEC management wants it to serve. Perceived conflicts of influence and interest will hamstring its effectiveness.
In addition, I strongly urge the SEC to consider having the ombudsman serve its internal workforce. I serve both internal and external cases which provides a full view of the organizational system and higher value to both employees and management.
Ultimately, the securities and exchange SYSTEM in the US would be more effective and prevent problems at earlier stages if the SEC required internal organizational ombuds in all regulated, 500+ employee firms. This is a "systems solution" that serves the American public by evolving higher-integrity cultures in those firms.
Again, if a successful SEC ombudsman program is your goal, it should be chartered and structure according to time-tested Standards of Practice to be successful and cost effective. Thank you. Don Noack