SEC Chairman Mary Jo White, in a recent speech, highlighted the importance of “All-Encompassing Enforcement,” which involves the “vigorous use of criminal, civil, and regulatory tools to enforce the securities laws.”  Chair White stressed the importance of threatening and pursuing criminal actions as the most powerful enforcement tool.  She noted the significant rise in criminal prosecutions arising from the securities markets during the last two decades, including criminal actions against investment advisers for “false valuations, overcharging, and hidden fees.”  She also described the deterrent effect of SEC enforcement actions that “are closely watched by industry participants” so that they have a “multiplier effect by having meaningful impact on market participants who are not involved in the particular misconduct that has been charged.”

OUR TAKE: Under Chair White, a former federal prosecutor, the SEC is stressing enforcement actions and referrals for criminal prosecution as regulatory tools to change industry-wide behaviors.