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Leave it to Joseph Grundfest to look at Winona Ryder’s shoplifting woes and see lessons for the Securities and Exchange Commission. The starlet’s famous trip through a Saks Fifth Avenue store was central to the Stanford Law School professor’s tutorial earlier this month on the SEC’s new rules for lawyer conduct. Grundfest, a leading securities educator and former SEC commissioner, said the legal system was set up in such a way that Ryder had to have understood the risks. But when it comes to the SEC’s enforcement, Ryder had it tough compared to executives who break securities laws, Grundfest said. He ticked off his big three factors of a good law enforcement system, using Ryder to illustrate: She got caught because there were security cameras; she got arrested on the scene because there were guards; and the courts were swift and could have been harsh. That’s not the case with executives or lawyers who break the law, he said. “A weak Securities and Exchange Commission is not in anybody’s best interest,” Grundfest said. In addressing securities lawyers gathered for a meeting of the Federalist Society in Palo Alto, Calif., Grundfest said the best thing the federal government could do to put executives and Ryder on equal turf is to give the SEC more money. Instead, the SEC has been told to write more rules, he said. The Sarbanes-Oxley Act, the corporate governance reform law enacted in the summer, mandated that the SEC draft rules for lawyers, and commissioners complied. Grundfest is not a fan of the rules adopted last month. Lawyers complain the new rules may impede attorney-client privilege and go beyond the scope of Sarbanes-Oxley. Grundfest echoes those gripes, and he added a few more. As if channeling for an English professor, Grundfest sounded off about the SEC’s frequent use of double negatives in violation of its own plain English rules. He suggested that perhaps the SEC was intentionally making the rules less than clear. Grundfest contends the regulators failed. “I’m not sure the cleverness works,” Grundfest said. Perhaps the SEC could take a lesson from the professor. He capped off his talk by evoking another famous female celebrity, this time selecting a champion figure skater. “I’m beginning to feel like Michelle Kwan,” Grundfest said, “with all this spinning around.”

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