Not only does almost all business operate in a highly regulated environment, but there's also a heightened sense of regulation. When I think about compliance and regulation, I actually like to divide the world into the pre-Bernie Madoff world and the post-Bernie Madoff world. After a major scandal or a large industry decline, regulatory focus generally becomes magnified, and a perfect example is the Bernie Madoff fraud. So, I think everybody knows who Bernie Madoff is. There was a seismic change in the regulatory environment once his $30 billion Ponzi scheme was discovered in December of 2008. It was the biggest fraud in the history of the world, not just the biggest securities fraud but the biggest fraud ever and as such, it dramatically changed the way financial regulators viewed their role. Arguably, regulators did not pay close enough attention to complaints or whistle-blower allegations and even worse, they may have missed the fraud during the numerous examinations they conducted. In fact, some believe that the Madoff fraud should've been detected by the regulators years, if not decades earlier. So, I was a criminal prosecutor and a securities regulator in New York City for many years, and these are the things you fear the most, missing a clue, not following the evidence to the end of the path, disregarding a fact, and sometimes even, not listening to your gut. As a result, financial regulators have re-examined their procedures for reviewing complaints and for reviewing whistle-blower allegations. They've increased the number of examinations and enhance their scrutiny during those examinations. They've also felt less constrained in the type of cases that they have brought. So, one great example of this is the 2010 case, the SEC filed against Goldman Sachs and a Goldman Sachs employee for making material misstatements and omissions in connections with a synthetic collateralized debt obligation that Goldman had structured and marketed to investors. That was called Abacus 2007, AC1. It was a case that many thought was really not that clear cut. A case where the SEC believed in the charges but I think the outcome was probably uncertain. Again, as a former regulator and prosecutor, it's always better to bring cases that are quote slam dunks, right? Easy to win. But to the SEC's credit, this one was not that simple, yet they brought it anyway. An article on the front page of The Wall Street Journal, really summed it up nicely when they talked about the case and they said it "Showed a combative streak from the SEC, which has been under mounting pressure after letting slip through its fingers early probes into the Ponzi scheme of Bernard Madoff and the alleged fraud of Texas financier R. Allen Stanford." That was another multi-billion dollar fraud that again, arguably, the regulators should have caught earlier. All of this regulatory focus is unlikely to change. Moreover, it's likely to have spillover effects into other industries and continue for years to come. It's important to remember that the Bernie Madoff fraud and the Stanford fraud, coincided with the financial collapse of 2008. In fact, the collapse of the markets is likely what led to their Ponzi schemes unraveling. As a result of all of that, we've seen increased regulation, increased examinations, increased number of investigations, increased number of enforcement proceedings, and increased number of indictments, arrests, trials and convictions, and record amounts of time that people have spent in prison. Another aspect of aggressive enforcement can be found in the Federal Trade Commission. The FTC is a relatively small independent agency responsible for a vast array of consumer protection enforcement areas from false advertising, to fraud, to unfair debt collection practices, to disclosure problems and consumer lending, and so much more. Think about how many rules the FTC enforces and what kinds of topics they cover. The FTC enforces the Franchise Rule, the Warranties and Guarantees Rule, the Eyeglass Rule, the Funeral Rule, the Care Labeling Rule, the CAN-SPAM Rule, the 900 number Rule, the Green Guides, the Leather Guides, the Textile Rule, and dozens more. In addition to all of these authorities, the FTC receives literally millions of complaints every year. With this breadth of responsibility, the FTC needs and uses an effective strategy to change corporate behavior. It has to use its resources wisely to have the biggest impact. It has to get bang for the buck. The FTC, from what I can tell, selects cases that can shape the behavior of an industry and goes really big in getting media attention on those cases to have the greatest impact. Let's take automobile leasing, in the late 1990s, many car manufacturers were advertising " Zero down" leasing offers for their cars. The issue was that there were many other fees which could total sometimes more than a $1000 that were not considered part of the "Down payment". The FTC viewed this as a deceptive practice under the FTC Act, and took action against major car manufacturers like, General Motors, and Honda, and ISUZU, and others. The case is settled with no admission of wrong doing by the car manufacturers. But the settlements all had the same standard, which is that, they had to disclose clearly and conspicuously the total due, at least signing. These cases were very broadly advertised at the time and made a big splash not only in the auto industry, but it seeped into other industries where upfront costs to consumers had to be described fully and clearly before the deal was signed. All of this shows that regulators, just like the regulated, have important decisions to make about compliance. They have a responsibility to use taxpayer funds appropriately, to respond to the many areas that need attention, to not miss indicators of big problems, to be thorough, and to protect the soundness and fairness of critical industries and practices that affect us all.