Bank of America Corp (BAC): Could the SEC Actually Get Some Teeth?

Unleash the watchdogs
Many of us are looking to the SEC to change a lot of things. To give credit where it’s due, though, the SEC does have some impressive new tools for investors. The say-on-pay mandate has been a major step for shareholder rights. Proxy votes are finally getting the attention of many corporate managements and boards. Just this week, Target Corporation (NYSE:TGT) almost lost a say-on-pay vote; its board would be wise to rethink compensation policies since nearly half its shareholders believe CEO compensation is too high.

JPMorgan Chase & Co. (NYSE:JPM)‘s Jamie Dimon may have won the vote regarding his dual roles as chairman and CEO, but the fact that it was big news — not to mention, that there was a possibility shareholders could shoot his chairman role down, even in a non-binding vote — is a victory of sorts for corporate governance awareness.

Meanwhile, GMI Ratings recently released a report pointing out that investors who spot and heed red flags that could point to fraud could significantly boost their returns. GMI screened out 25% of Russell 3000 companies that received the lowest scores in its fraud-detection analysis, and found a 29% increase in portfolio value over a 10-year period.

In other words, investors need to protect themselves from investing in shoddy businesses, particularly the ones that could end up on a worst-case scenario hit list. And of course, we investors could certainly use some help from the SEC and other financial regulators. A close eye and real repercussions would be helpful.

Hopefully the SEC will continue to take stronger stands in favor of investors’ best interests, and more regulators will truly make sure that wrongdoing is acknowledged and punished. If we don’t want to give companies incentive to do the wrong thing, that watchdog could use a lot more bite.

The article Could the SEC Actually Get Some Teeth? originally appeared on Fool.com.

Alyce Lomax has no position in any stocks mentioned. The Motley Fool recommends Bank of America Corp (NYSE:BAC). The Motley Fool owns shares of Bank of America Corp (NYSE:BAC) and JPMorgan Chase & Co. (NYSE:JPM).

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