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‘Broken Windows’ Strategy Raises Risk-Management Fears

Joe Mont | February 18, 2015

Mary Jo White, chairman of the Securities and Exchange Commission, first dropped the phrase “broken windows” on the compliance world during a speech in October 2013.

Just as police officers deter serious crime by tackling small quality of life issues—from graffiti to turnstile jumpers to, yes, breaking windows—White’s idea was to do the same with SEC rules and requirements. “It is important to pursue even the smallest infractions,” she said.

More than a year later, the concept remains divisive. Proponents say the SEC is tasked with enforcing all rules, regulations, and disclosure requirements, and it should do so with vigor. Critics say the plan is flawed and creates an undue burden on compliance officers who must now worry about minutiae along with bigger risks.

Stoltmann-andrew-0215“The SEC is actively...

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