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SEC Chair: Directors are Essential Gatekeepers

In a speech at the Stanford Directors’ College, SEC Chair Mary Jo White shared the SEC’s views on directors.  She reiterated the concept that directors are “essential gatekeepers” working on behalf of shareholders.  She said the SEC views directors “as our partners in the effort to ensure that investors in our capital markets can invest with confidence and, hopefully, success.”  While she acknowledged that the SEC typically uses the term “gatekeeper” in reference to lawyers, auditors, and certain other professionals, she noted that “a company’s directors serve as its most important gatekeepers.”  She outlined key responsibilities of directors, emphasizing their important role in setting the “tone at the top.”  Chair White urged directors to understand the views of their company’s regulators by listening to their public speeches as well as more direct communication.  She also addressed the concern that SEC enforcement actions may discourage qualified individuals from agreeing to serve on boards, stating that “[s]ervice as a director is not for the faint of heart, but nor should it be a role where you fear a game of “gotcha” is being played by the SEC.”