Chairman Elisse Walter
U.S. Securities and Exchange Commission
Feb. 11, 2013
Good morning. On behalf the Securities and Exchange Commission and my colleagues at the Department of Justice and the Federal Bureau of Investigation, I am honored to have the opportunity to welcome you to Washington D.C. and this Foreign Bribery and Corruption Conference.
It’s a pleasure to look out over this group and see in attendance men and women representing more than 50 law enforcement and financial regulatory agencies from developed and developing nations in every corner of the globe.
We are a diverse group. And each of the different nations and agencies we represent has different priorities and strategies, mandates and jurisdictions, traditions and laws. But when I look around this room, I don’t see a hundred discrete agendas thrown randomly together. Instead I see the strong core of an international network, coming together in the shared pursuit of a global financial system that benefits honest competitors and drives growing prosperity in all nations.
While we differ in a variety of ways, we have one important thing in common: we understand that fair and honest financial markets are an important pillar of economic growth for countries of every size and in every region. And we understand that only by collaborating in pursuit of those fair and honest markets can we bring them about. We all benefit when we are able to limit corruption and manipulation, and we all suffer when even a few markets are tainted by greed and graft.
It’s basic common sense: whatever larger growth and development strategies our nations pursue, the ability to attract private capital and investment and to encourage trade are critical components of energetic economies.
In today’s financial environment, capital flows freely around the world in fractions of a second – rewarding economies with functioning financial systems, and avoiding those in which the normal risks of investing are compounded by the possibility of corruption and manipulation. This makes market regulation not merely a question of law and order, but of nation-building – of creating an environment in which available capital supports rapid development and broader prosperity for the people we represent.
In country after country, we see the people demanding – often in forceful public demonstrations – an end to cronyism, bribes, and corruption. They are passionate because they understand that applying the rule of law to market transactions opens markets and brings economic opportunity for all.
They know that the quality of their roads, their electrical grid, and their medical facilities suffers when the highest bribe, not the best proposal, determines contracts.
This is where you all come in, where you have an opportunity to not only prosecute wrongful conduct, but to change culture for the benefit of billions and help them build their children a better world.
Whatever our nation of origin, we are all in this together. Increasing investment and encouraging growth in any one nation benefits all of its neighbors and trading partners. Stable financial markets fueling growing economies can create a virtuous cycle of international trade and investment that benefits us all.
The same economic globalization that allows capital to move freely into stable financial markets around the world can impede as well as encourage our efforts, though. Failure to enforce laws can put honest companies at a disadvantage, harming those that play by the rules. It can mean higher costs and economic inefficiencies for countries that lack the will or the expertise to crack down on corruption – benefiting a few individuals or groups while harming the larger populace and a nation’s development goals.
And as Chairman of the U.S. Securities and Exchange Commission, I have a particular reason for looking forward to our collaboration in pursuit of corrupt practices. At the SEC, one of our primary mandates is to protect investors.
And we have found that corrupt practices by a registered company are generally indicators of larger problems within the business – problems with the potential to harm that business’s shareholder-owners.
Bribery and other corrupt practices may result in accounting fraud and falsified disclosures where shareholders are not getting an accurate picture of a company’s finances in their regulatory filings. Bribery means losing control of – or deliberately falsifying – books and records. Often, key executives or board members are kept in the dark, limiting their ability to make informed decisions about the company’s business. Obviously, engaging in corrupt practices means weakening or circumventing internal control mechanisms, leaving a company less able to detect and end not just corruption but other questionable practices.
A company that has lost its moral compass is in grave danger of losing its competitive roadmap, as well – while shareholders are kept in the dark.
And so, just as we are committed to fighting practices that encourage corruption, weaken markets and slow growth in all of the countries represented here, I look forward to working with you to uncover, investigate, and end practices by companies that harm our moral standing, our economic competitiveness, and the shareholders my agency represents.
I always come away from meetings like this encouraged. There will always be individuals and firms who look no further than their own short-term interests and care little for laws and regulation designed to promote and protect the greater good. And the global economy has given them a greater field to play on – to circumvent the rules in ways that harm us all.
But I know, as well, that the agencies you represent and people like you see the larger picture – you understand the damage done by corrupt practices. I see an increasing commitment to fighting corruption here in the U.S. – where our Foreign and Corrupt Practices Act activity has increased substantially in recent years – and around the globe. And I am pleased with the increasing collaboration I have seen over the many years I have served at the SEC, as nations increasingly come together to fight for fair and honest markets.
Thank you for coming to this conference. I hope that you will not only learn new skills and procedures and share with us those you have already mastered, but that you will meet your counterparts at my agency and the others represented here and begin building not just a legal framework, but a personal network against the practices we abhor.
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