Page 253 - Executive Warfare
P. 253

The New Bosses



                  At the same time, Eliot Spitzer, then New York State’s attorney general,
               took it upon himself to use some underemployed old laws to bring secu-
               rities analysts, mutual funds, and insurance industry players to heel.
                  Now the federal agencies have woken up. The SEC hired hundreds of
               new lawyers, accountants, and investigators in the wake of those giant
               accounting frauds. Before his fall from grace, Spitzer’s career inspired state
               regulators everywhere, who now think,“Hey, I can be famous, too.” Even
               cities are getting into the act. In early 2008, Cleveland and Baltimore both
               sued banks for their role in the subprime mortgage meltdown.
                  In other words,there are a lot more compliance sheriffs in town than there
               used to be—and they are a lot more ambitious.Attract the attention of one,
               and you may attract the attention of many. Don’t think you can escape their
               attention just because you are in the nonprofit or academic world, either.
               New York’s next attorney general after Spitzer,Andrew Cuomo, won a series
               of nice headlines for himself in 2007 by going after university financial aid
               departments for taking kickbacks from student loan companies.
                  Because they are more active, regulatory agencies can attract better
               people,too—so they are now full of smart
               young men and women hoping to make
               a career on your stupidity or cupidity.      THERE ARE A LOT
                  This is a very tough crowd.In my opin-    MORE COMPLIANCE
               ion, deep down, many of them believe         SHERIFFS IN TOWN
               that corporations, big nonprofits, and        THAN THERE USED
               universities are inherently arrogant and     TO BE—AND THEY
               corrupt—and it’s just a question of find-     ARE A LOT MORE
               ing out what’s corrupt about you.You do      AMBITIOUS.
               not want to get caught in this vortex. So
               how to handle them?
                  The first rule is the same as that for reporters: Develop relationships
               with your regulators before there is trouble on the horizon. Hire lawyers
               who’ve worked as regulators and understand their motivations. Have peo-
               ple on your staff who know the top people in the regulators’ offices.



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