Mary Jo White, chair of the U.S. Securities and Exchange Commission, delivered the 14th Annual A.A. Sommer, Jr. Lecture on Corporate, Securities, and Financial Law Lecture at Fordham Law School on Oct. 4.

In less than an hour, White described an agency with global reach that mirrors the ever-evolving markets it regulates. While dealing with fresh issues ranging from “flash trading,” to “dark pools,” and other high-speed phenomena, the chair said the SEC must also implement new rules put forth by the Dodd-Frank Act, the 2010 law that overhauled the nation’s financial regulatory system—all while remaining fiercely independent and non-partisan.

In her talk, “The Importance of Independence,” White noted that the very law that the SEC is now charged with implementing almost stripped the agency of its regulatory power to protect investors of mutual funds. She noted that, in the wake of the 2008 financial crisis, many in Congress wanted to create a new agency. Then Chairman Mary Schapiro argued that a new agency would not have the in-depth knowledge of securities markets. White cited Schapiro’s steadfast fight to keep the regulatory power under the agency’s “blanket of expertise”–despite pushback from the Obama administration—as a clear example of the agency’s independence.

Now three years since Dodd-Frank became law, the agency’s role in carrying out that law is firmly established. White listed a series of historic precedents that preceded Schapiro’s 2009 stance, including several by the lecture’s namesake, Al Sommer, who was sworn in as SEC commissioner shortly after the Watergate scandal tainted the agency as being too cozy with the Nixon Administration. White said Sommer quickly reestablished SEC’s reputation as the most staunchly independent federal agency.

Nevertheless, one audience member questioned the agency’s independence as it relates to the “revolving door” between the SEC and private industry, a reference to the chair’s own background working in the private sector.

“I was a better U.S. Attorney because of my years representing companies, learning the ways companies think, the way boards think,” she said. “Being in private practice you really learn about the respect and leverage that the SEC has. I don’t think the SEC folks who haven’t been in the private sector realize just how much leverage they have.”

White said that while working in the private sector she encouraged her clients to cooperate with the SEC, because its prosecutors have complete discretion to impose criminal liability. Now, as chair, White said that she is acutely aware of that power. She noted that certain Dodd-Frank rules passed by Congress invoking the commission’s mandatory disclosure powers are more directed at exerting societal pressure on companies, rather than requiring them to disclose financial information to inform investment decisions.

White said that the intent–whether to improve safety conditions of mines in the Congo, or environmental concerns–may be laudable to her as a citizen but they shouldn’t have a place in the SEC.

“I must question, as a policy matter, using the federal securities laws and the SEC’s powers of mandatory disclosure to accomplish these goals,” she said.

White maintained that while disclosure remains key to regulating securities, too much disclosure can lead to “information overload” which makes it difficult to for investors to make decisions.

“To safeguard the benefits of this ‘signature mandate,’ the SEC needs to maintain the ability to exercise its own independent judgment and expertise when deciding whether and how best to impose new disclosure requirements,” she said.

The SEC’s unique expertise makes it best suited to determine disclosure rules consistent with the federal securities laws, said White.  She expressed concern that recent directives from Congress “have been quite prescriptive, essentially leaving no room for the SEC to exercise its independent expertise and judgment in deciding whether or not to make the specified mandated disclosures.”

Nevertheless, White said she recognized that when congress and the president enact a statute mandating such a rule, she can’t say “no.” Instead, she said, the commission must write the rules in a way that faithfully carry out congress’ mandate.

White discussed how the courts review the SEC’s enforcement settlements requiring admissions of defendants’ wrongdoing even when a settlement is reached. She said she was the first U.S. Attorney to require admissions as part of a deferred prosecution agreement with a corporation. Likewise, at the SEC she said admissions are appropriate.

“In some cases involving particularly egregious conduct or widespread harm to investors, for example, a heightened level of public accountability in the form of admissions may be called for if we are to send a sufficiently strong message of deterrence,” she said.

Though she said the “no-admit-no-deny paradigm continues to be of enormous value,” the core decision as to whether to seek admissions is a decision for the Commission to make through its independent judgment and should be respected when challenged in the courts.

To read the lecture in its entirety click here.

A U.S. Securities and Exchange commissioner speaking at Fordham on Oct. 27 took a measured approach to mandatory corporate disclosures, saying that some may not be warranted.

Commissioner Troy A. Paredes delivered Fordham Law’s annual A.A. Sommer Lecture. He advocated a rigorous cost-benefit analysis when determining effective disclosure regulations. He asserted that “more information is not always better than less” when it comes to helping investors make decisions.

“There is no disagreement that transparency achieved through disclosure is central to the federal securities laws,” he said. “That said, when evaluating the practical effects of particular disclosures it is not enough to emphasize the benefits of disclosure. One also has to engage the costs.”

Paredes outlined two costs that must be considered when determining what information and how much should be disclosed to investors. First, he suggested, the amount of information required should not put an onerous burden on the companies who are required to disclose it.

This is particularly vital for small businesses, Paredes said. Though small businesses already can avail themselves of a more streamlined and efficient regulatory regime, Paredes said he believes more reforms are needed.

“We need to consider new opportunities to alleviate regulatory demands that siphon the funding and growth from small business,” he said.

Paredes also argued the cost of information overload. He suggested that in an environment where too much information is disclosed, investors will be unable to digest the information or, worse, may disregard financial disclosures all together.

“The bottom-line risk with information overload is that investors will have so much information available to them that they will sometimes be unable to distinguish what’s important from what’s not,” he said.

“Ironically, if investors are overloaded, more disclosure actually can result in less transparency and worse decisions,” Paredes said.

He also offered practical suggestions for more effective methods of disclosure, such as enhanced use of the Internet, smartphones, and visually enhanced statements.

Paredes is the fifth sitting SEC commissioner to deliver the Sommer Lecture, which was inaugurated in 2000 in honor of A.A. Sommer. He was a commissioner of the SEC from 1973 to 1976 and joined the law firm of Morgan, Lewis & Bockius LLP, which supports the annual lecture, in 1979.

Paredes said he chose to speak on disclosure because of its consistent, central relevance to the work of the SEC.

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Sean J. Griffith, the T.J. Maloney Chair in Business Law and director of the Fordham Corporate Law Center, said he was pleased to have such a prominent intellectual leader in the field deliver this year’s Sommer Lecture.

“The Corporate Center has three core tasks: to provide students opportunities for education and networking, to give the faculty something to think about and to engage with as they pursue their scholarship, and to reach out to the public and show Fordham as a leader in corporate law. The Sommer Lecture achieves all three of these objectives,” he said.

Paredes himself said that Sommer’s work had served as a valuable resource in his research. Though they never had the opportunity to meet in person, Pardes imagined he and Sommer would have had lots to talk about.

“I could not properly study the role of disclosure under federal securities laws without reading the work of Al Sommer,” Paredes said.