EMERGING TRENDS IN CORPORATE GOVERNANCE
By: Eric M. Marion, Esquire Elias, Matz, Tiernan & Herrick LLP
R
ecent high profile revelations of financial loss and mismanagement have added support for the demands for more extensive federal regulation of corporate governance and risk management at financial institutions. Frequently, poor management oversight, lack of internal controls, and the “tone from the top� have been cited as the cause of the financial breakdown. The most recent driver of many regulatory initiatives continues to be the Dodd-Frank Wall Street Reform and Consumer Protection Act. 32 | Transactions | www.pacb.org
Among the vast number of new regulations driven by the Dodd-Frank Act is a proposed rule addressing enhanced prudential standards which will require affected institutions to establish a risk committee. In addition, a proposed regulation on incentive-based compensation arrangements has been published. Corporate governance practices increasingly are being prescribed by legislation and regulations in an attempt to address the public and political perception that the breakdown in the financial and credit markets was due in large part to flawed corporate