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U.S. Securities and Exchange Commission

Speech by SEC Chairman:
Remarks Before the Bennett S. LeBow College of Business at Drexel University


Chairman Mary L. Schapiro

U.S. Securities and Exchange Commission

Philadelphia, Pennsylvania
June 11, 2011

President Fry, President Emeritus Pennoni, Provost Greenberg, Dean Tsetsekos, Chairman Greenwalt and Members of the Board, Mr. Frick, members of the faculty, degree recipients and honored guests:

Congratulations to the members of the class of 2011. It is an honor to accept this Doctor of Business Administration from the Bennett S. LeBow College of Business at Drexel University. And it is a privilege to have a few moments to address the many students receiving their degrees today.

I’d like to offer congratulations, as well, to my good friend President John Fry on this, his first commencement as President of Drexel University. I admit that I was sad to see him leave his position as president of my own undergraduate alma mater, Franklin & Marshall College, because of the extraordinary work he did there. But I know that the energy and inspiration he is bringing to West Philly will ensure Drexel’s continued upward trajectory – toward a future of robust growth and academic distinction.

As you know, this ceremony is not an end but a beginning – a commencement of the next phase of your life.

For most of you, this will mean a career in business or finance. But, whatever career you pursue, you are likely to find yourself struggling to balance twin demands that are often in tension: the imperative of becoming a part of an effective team, and the necessity of preserving the things that allow you to offer unique contributions to your employer, your community, and our world.

You will find that corporate culture can encourage and even demand a certain conformity. And, in fact, as a manager or executive you will discover that consistency in attitude and approach is necessary. After all, profitable businesses are built not only on individual genius but on successful collaborations.

But don’t let consistency become an end in itself. You can still move in concert with your team and yet bring something unique to your work. Think about the last time you flew: a hundred grim-faced people were hunched over their laptops or glued to video games – simply enduring the harsh efficiency of modern air travel. But here and there, a few people were looking out the window, delighting in the opportunity to see the world from a different perspective. They were still travelling in the same direction as everybody else, but perhaps they landed with an idea or inspiration that could not have come had they not looked at the world beyond the airplane’s cabin.

Your ability to hold onto your own vision even as you become a part of a larger team will allow you – when the moment arrives – to make your mark in the field you choose.

It will serve you in other ways, as well. As Chairman of the SEC, I find that many of the business ethics problems severe enough to be investigated by us are the result less of individual greed than of individuals succumbing to pressure from their peers.

Business ethics seems a simple subject in the abstract: don’t lie, don’t steal. Don’t let the healthy pursuit of profit metastasize into the type of greed that destroys individuals and harms the companies and the people around them.

And, from the classroom, ethical breaches often seem largely to be the isolated actions of evil individuals, unconcerned with the damage they do. From the time of Charles Ponzi, who gave his name to an infamous form of financial fraud, to the present day, when Ponzi schemers and corporate fraudsters hide massive losses from shareholders and cost investors billions of dollars, most people have considered financial crime the result of conscious decisions to do wrong.

While this is often the case, the reality is far more complex.

Let me give you an example.

You may have read in the newspapers that the SEC has spent a great deal of time over the last four years working alongside the Justice Department to break up one of the largest insider trading schemes ever uncovered. And last month, a ringleader of that scheme, the founder and de facto CEO of a multi-billion dollar hedge fund was convicted on 14 counts. He now faces 20 years in prison and tens of millions of dollars in penalties.

The founder was the face of the conspiracy – it was his name in the headlines. But, in fact, more than two dozen other traders, corporate executives and lawyers have received criminal indictments, and most of them have already pleaded guilty. Interestingly, in many cases, these were not people who profited greatly from their crimes, certainly not in proportion to the many millions of dollars the hedge fund earned.

In fact, we often find in conspiracies like this that people become involved because they felt obligated to return a favor. Or they use insider information to enhance their reputations among their colleagues as researchers and analysts. Or they may have felt the pressure to prove their performance to others or to meet expectations of superiors and peers – trading on inside information in an atmosphere where such actions are tolerated because “everybody does it.”

The wreckage this conspiracy has left in its wake is simply extraordinary – far beyond the careers of those individuals convicted of felony offenses.

And, it isn’t the grand actions of one individual or a small group that caused it. Rather the damage is the collective effect of smaller decisions made by a number of people. Decisions that might have been different, if the people who made them had listened to their own instincts, rather than responded to pressure from the people around them.

I have no doubt that this spring, hundreds – if not thousands – of graduation speakers have quoted Shakespeare’s famous line: “to thine own self be true.” But I think it’s important, in a discussion like this, to finish that quote as Shakespeare did – if you are true to yourself, “it must follow that…Thou canst not be false then to any man.”

Regardless of your ambitions – and I know that there is a lot of ambition in this room today, and I’m pleased that there is – you cannot be true to yourself by violating the principles you have learned at Drexel, from your parents and the places you worship, or by harming people who have placed their trust in you.

When you deal with ethical dilemmas in the years to come, I hope that you will stay true to yourself by remembering those whose lives your decision will affect.

And I hope, as well, that staying true will speed you toward the goals you carry with you across the stage today. American financial history is defined by individuals who set their own path. It is illuminated by men and women who – despite hardships, failures and the consistent pressures of corporate life – created pioneering companies or transformed existing industries by keeping their vision alive while walking an ethical path.

Since you’re graduating from a university with one of the largest and best co-op programs in the country, you’ve had enough experience to know that things are never as easy as they seem in textbooks or the classroom. Life is not binary: your career will be marked by hard decisions and necessary compromises.

But you are so fortunate. With the skills that brought you to Drexel, and the excellent education you have received, I am confident that you will be able to receive consistently reliable advice from the only person who will always be there when the tough decisions are made: you.

Thank you and congratulations!



Modified: 06/11/2011