SEC Chair Calls for “Zero Tolerance” Enforcement

In a recent speech, SEC Chair Mary Jo White called for “zero tolerance” for white collar enforcement and advocated for changing the law to make it easier for prosecutors and regulators.   Ms. White described the SEC’s “priority that we are placing on establishing individual liability” with a focus on holding corporate officers accountable as the “core pillar of any strong enforcement program.”  Ms. White argued for changes in the law that would allow prosecutors and regulators to punish an executive without showing that s/he participated or caused the wrongdoing.   Ms. White lauded the UK regime that allows prosecution of senior executives for misconduct in their areas of responsibility if they failed to take reasonable steps to prevent the misconduct.  Ms. White also expressed her support for deferred compensation arrangements that hold back compensation until a possible prosecution period has run.  Ms. White also expressed support for a more-empowered SEC: “Although I often wish it were otherwise, the SEC does not have the authority to send anyone to jail.”

OUR TAKE: While the regulatory emphasis may change with a new Administration, both parties appear to favor heavier-handed enforcement against individual corporate actors.  Other developed economies (e.g. UK, Japan, Canada, France) take a much more pro-government approach to private sector enforcement.

https://www.sec.gov/news/speech/chair-white-speech-new-york-university-111816.html