Schapiro Declares War on Fraud, Expedites Enforcement Cases

 In a recent speech, Mary Schapiro, the new SEC Chairperson, announced changes to expedite and increase enforcement cases. She announced the end to the SEC policy to obtain full Commission approval to pursue cases involving civil monetary penalties. She also announced a more rapid approval of formal orders of investigation that allow SEC staff to use subpoenas. More generally, she announced her intent to “reinvigorate the SEC’s enforcement program.” She quoted Joseph Kennedy: “The Commission will make war without quarter on any who sell securities by fraud or misrepresentation.” In the same speech, she highlighted some initial SEC priorities including additional oversight of broker-dealers and investment advisers, creating a CDS clearinghouse, and improving credit ratings.

OUR TAKE: It appears that the new SEC under Ms. Schapiro will focus on law enforcement, rather than regulatory initiatives. Additional evidence includes the appointment of a former federal prosecutor as Enforcement Chief. For the investment management industry, it will feel like 2000-2003 again, when the state regulators and ultimately the SEC pursued significant fines and penalties in a raft of market timing and revenues sharing cases.

http://www.sec.gov/news/speech/2009/spch020609mls.htm