SEC Chairman Vows to Deploy the “Full Enforcement Arsenal”
In a recent speech, SEC Chairman Mary Jo White warned that the SEC will be deploying the “full enforcement arsenal” including requiring admissions and naming individuals. Ms. White, noting that her views on requiring admissions come from her work as a criminal prosecutor, asserted: “Anyone who has witnessed a guilty plea understands the power of such admissions – it creates an unambiguous record of the conduct and demonstrates unequivocally the defendant’s responsibility for his or her acts.” With respect to pursuing individuals, she said, “I have made it clear that the staff should look hard to see whether a case against individuals can be brought. I want to be sure we are looking first at the individual conduct and working out to the entity, rather than starting with the entity as a whole and working in. It is a subtle shift, but one that could bring more individuals into enforcement cases.” She believes that “When people fear for their own reputations, careers or pocketbooks, they tend to stay in line.” Ms. White also described why she will focus on enforcement: “[M]ost Americans do not see how well our experts examine a financial firm, review a regulatory filing, or conduct economic analysis on a complex rule. But they do pay attention when we bring a major enforcement action…”
OUR TAKE: The ultimate question is whether this “full enforcement arsenal” policy will really deter wrongdoing or simply scare the good citizens into spending more on regulatory compliance and less on their businesses. It may also result in the SEC spending more time in court if respondents choose to litigate rather than accept punitive settlements.