As we look towards 2013, here are three issues that will impact businesses:
Cyber Security/Data Theft – Cyber security is an issue that made headlines in 2012, and will continue to be one for 2013. One thing to watch for is whether and what kind of regulations the government will put in place to govern how corporations prepare for and respond to these attacks.
The Cyber Security Act recently failed to pass a procedural vote in the Senate, and this has led many to speculate that the President will issue an Executive Order given the increasing cyber security threat American corporations face. The SEC has also issued “guidance” to companies on when to disclose an incident to investors. However, it has not issued a formal, mandatory rule or regulation.
Increased Federal Regulation and Enforcement – The re-election of President Obama is expected to accelerate regulations and enforcement actions in a variety of areas.
- Dodd-Frank rulemaking will continue in 2013. As of November 1, only 33.4% of the total required rulemakings have been finalized, while 132 (33.2%) rulemaking requirements have not even been proposed. Look for significant activity geared towards meeting the rulemaking deadlines.
- FCPA enforcement actions are expected to increase. On November 14, 2012, the U.S. Department of Justice and the Securities and Exchange Commission issued their long-awaited joint "Resource Guide to the US Foreign Corrupt Practices Act." The 100+ page document provides corporations with a single resource to consult when analyzing any FCPA issue, but also leaves unanswered many issues regarding the statute's potential scope. Look for legislative action in 2013 to try to fill in those gaps.
Whistleblower Claims on the Rise – In 2012, the first year of the Dodd-Frank Whistleblower Program, the SEC received more than 3,000 tips – resulting in 143 enforcement judgments and orders. The most common complaints related to corporate disclosures and financials (18%), offering fraud (16%), and manipulation (15%). The bulk of the tips inside the U.S. came from California (17.4%) with New York and Florida following at about 10% and 8%, respectively. In 2013, internal monitoring, reporting, and investigations will be more important than ever in order to try to avoid external government investigations.
As developments occur in each of these areas and new rules go into effect, we will be bringing you regular updates on how to best prepare your organization.