How Mary Jo White can win over her skepticsApril 1, 2013: 5:00 AM ET
Dear Ms. White: Your biggest detractors could become your biggest fans. Here's an eight-point plan you should follow.
FORTUNE -- Welcome (almost) to the SEC, Mary Jo White. I wasn't a fan of your nomination, but it looks like the Senate will soon confirm you as SEC chair. Here's an eight-point plan that you can use to overcome skeptics' concerns.
1. Be tough, but fair
Be a tough, but fair, enforcer. Take on the big banks and the big names. Board members around the country don't want bad-apple corporations and executives to get away scot-free. A lack of strong enforcement provides a competitive advantage to cheaters.
Your have oodles of conflicts of interest due to your background as a corporate lawyer, but you have to start somewhere. Ensure a thorough review of J.P. Morgan (JPM) CEO Jamie Dimon's London Whale disclosures. Senators Levin and McCain have done some of the work for you. Judges are skeptical about the way the SEC is negotiating settlements, most recently in the insider trading matter with SAC Capital. Bring cases and build trust in the SEC.
2. Install a "first in, first out" policy for rulemaking
Implement legislation in the order in which it passes. Don't allow further procrastination on Dodd-Frank. The delays only increase the possibility of a future crisis.
Implement the broker fiduciary standard. You will meet resistance, but clear regulation will aid prosecutions of future sellers of mortgage junk. Vanguard founder Jack Bogle supports it. He's right. Get on with the CEO-to-worker-pay disclosure rules, and move forward on the Volcker Rule and money market reforms.
3. Focus on disclosure
Put the corporation finance division of the SEC front and center. SEC Commissioner Luis Aguilar outlined how disclosure should work this proxy season. Now let the corporation finance division loose on fixing inadequate reports.
Law firm Sherman and Sterling issued a report last year saying that 5% of 100 large companies they examined didn't include required disclosures on compensation and risk in their proxies. Find out if the corporation finance division has done anything about this.
4. Make the proxy process work
Stop the corporation finance division's practice of giving companies license to exclude shareholder proposals from company proxies. The SEC's statements to companies on shareholder proposals have been haphazard, and this prevents good proposals from seeing the light of day.
Many board members recognize the benefits of shareholder activism. Why is there a mishmash of SEC guidance on shareholder proposals of all things when the SEC's mission is to protect investors?
The financial crisis shows how the big banks' stranglehold can upend our economy. Your predecessor made it clear that the largest banks are too big to manage. They appear too big to fail. Attorney General Eric Holder says they're even too big to jail.
Why? The SEC staff indicated that Citi (C), Morgan Stanley (MS), J.P. Morgan, and Bank of America (BAC) would not receive SEC backlash if they omitted those shareholder proposals from their proxies. How does that reassurance to the banks protect shareholders and our capital markets? It's hard to argue that these proposals, which all call for the banks to examine their strategic options (including spinoffs), represent business as usual.
Ask shareholders their views on the arbitrary nature of the so-called no-action process, which allows companies to comfortably exclude shareholder proposals. Change the practices. Provide consistent guidance to shareholders on how to word proposals.
5. Listen to everyone, not just your friends
Former law clients and ex-SEC officials will want your ear, but you should reach out to a wide swath of people with different views on regulation. You can show that you have an open mind by choosing people of different stripes to speak at SEC forums and discussions. Your choice of advisors will receive public attention.
6. Herd those cats
You will need to get SEC commissioner Daniel Gallagher in line. He's entitled to his opinions, but make sure he isn't walking the halls, thwarting the implementation of Dodd-Frank.
Get bank regulators to pull their weight. The FDIC started to work on a proposal to charge banks a higher FDIC premium if they had risky executive pay practices. Such a measure would complement SEC efforts on pay disclosure.
Get the Justice Department moving. Refer more cases to them and work with the department and the states to show that "law enforcement" is more than just two words strung together.
7. Get the funding you need. Spend it wisely.
Get Congress to boost your existing transaction tax funding. The charges will hit the high-frequency traders and market disrupters that are gobbling up the SEC's valuable time.
8. Start work on the SEC's five-year plan
The SEC needs to focus its protections on the investors who support capital formation. That means long-term investors, not traders. The SEC needs to look out for the weakest investors and ensure that the markets are fair to them.
A new five-year strategic plan should overhaul the measures that you and Congress use to judge the SEC's performance. Ask for guidance from a variety of people on this one.
Ms. White, your biggest detractors could become your biggest fans. It's time to show us that you have the management chops to do precisely that.
Eleanor Bloxham is CEO of The Value Alliance and Corporate Governance Alliance (http://thevaluealliance.com), a board advisory firm.