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Understanding SEC Enforcement

One of the main goals of any registered firm is to avoid an enforcement action.  The more you know about trends with regard to enforcement cases, the better equipped you are to succeed in that endeavor.  The good news is that the SEC is being more transparent with the industry than ever before with regard to goals, focus areas and its approach to enforcement.

SEC Chair Mary Jo White, in a speech earlier this week, shared three "pressure points" related to enforcement; the conundrum of multiple regulators working on the same case; when and how to charge individuals, entities, or both; and the expanding use of remedies including monetary penalties, bars, independent monitors and admissions.

A few interesting takeaways from White's speech include:

  • Feedback on when a case stays within the SEC and when it becomes a criminal case. Mary Jo White divided the enforcement cases into three categories: cases that do not involve intentional wrongdoing, but rather failures of compliance controls or reporting obligations (those stay with the SEC); cases that involve egregious fraud-based conduct (in which the criminal authorities will be participants in the investigation from the beginning); and finally cases where evidence of a criminal act is not overwhelming, but perhaps sufficient to find the offense beyond reasonable doubt (in those cases, the criminal authorities will monitor the SEC investigation closely in order to determine whether sufficient evidence has developed);
  • The focus on individuals and the use of tools used in enforcement actions against them. White dispelled the notion that the SEC settles with entities in lieu of charging individuals. Since the beginning of the 2011 fiscal year, the SEC charged individuals in 83% of its actions. White focused on SEC’s expanding use of Section 20(b) of the Exchange Act that imposes primary liability on a person who, directly or indirectly, does anything “by means of any other person” that would be unlawful for that person to do on his or her own.  White called Section 20(b) a “very powerful tool” in the SEC’s arsenal against individuals that can be used when aiding and abetting theories fall short because there is no underlying violation by anyone else.
  • The increasing use of non-monetary remedies including, but not limited to, bars from working in the industry, the mandatory use of independent compliance consultants to monitor wrongdoing, and the use of admissions of wrongdoing.

We encourage you to review White's speech in its entirety as there are several other interesting comments, albeit (as you might have gathered from above) some reinforcing past SEC communications.

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Events

Upcoming Events - September & October 2017

Upcoming Events Don’t miss the opportunity to meet with us in person to discuss the topics that matter most to you. SEC3 is teaming up with industry experts in NYC to discuss...

May 23, 2017 - Webcast: WannaCry Ransomware: Were You Really Protected or Just L…

When: Tuesday, May 23rd, 2017 | Schedule: 12pm - 1pm EST Who: Paul Caiazzo, CEO and Co-Founder, TruShield Security Solutions Michael Brice, Founder, BW Cyber Services John Lukan, Managing Director, SEC Compliance Consultants, Inc. We...

June 14, 2017 - Compliance Breakfast Briefing

8:30-9:00am - Networking and Continental Breakfast 9:00-10:30am - Program Location: Willkie Farr & Gallagher LLP | 600 Travis Street | Suite 2310 | Houston, TX Barry Barbash from Willkie Farr & Gallagher LLP,...

June 13, 2017 - Compliance Breakfast Briefing

8:30-9:00am - Networking and Continental Breakfast 9:00-10:30am - Program Location: Haynes and Boone, LLP | 2323 Victory Avenue | Suite 700 | Dallas, TX 75219 Validated parking is available in the garage attached...

May 31, 2017 - Chicago

9:00-9:30 a.m - Networking and Continental Breakfast 9:30-11:00 a.m - Program Location: Baker & McKenzie LLP | 300 East Randolph Drive | Suite 5000 | Chicago, IL 60601 Kristin Gonzalez and Jerome Tomas...

May 17, 2017 (NYC WIMF)

This event is by invitation only. Please email info@seccc.com to learn more.

May 15, 2017 (NYC Chief Compliance Officer Roundtable)

9:00-9:30am - Networking and Continental Breakfast 9:30-11:00am - Program Location: Blank Rome LLP | The Chrysler Building | 405 Lexington Avenue | New York, NY 10174 | 22nd Floor Boardroom | Phone:...

Webcast: The Most Insidious Cybersecurity Threat Is Also The Least Understood

When: Tuesday, April 25th | Schedule: 12pm - 1pm EST Who: Paul Caiazzo, CEO and Co-Founder, TruShield Security Solutions Michael Brice, Founder, BW Cyber Services John Lukan, Managing Director, SEC Compliance Consultants, Inc. Ransomware, the...

CCO Liability (Part III): Managing Liability Webinar

In this webinar, panelists discuss indemnifications and insurance as potential remedies to address the direct financial risks to a CCO. Attendees will learn: What terms and conditions should Chief Compliance Officers be...

Webinar: CCO Liability (Part III): Managing Liability: Navigating Indemnities an…

When: Tuesday, February 21, 2017 Schedule: 11:00am ET / 10:00am CT / 9:00am MT / 8:00am PT / 7:00am AT Description of Webinar: The National Society of Compliance Professionals is pleased to host...

Webcast: SEC 2017 Examination Focus Area – Cybersecurity Testing

Penetration Testing & Vulnerability Assessments - Examining the SEC & FINRA Requirements When: Wednesday, January 25th | Schedule: 12pm - 1pm EST Who: Paul Caiazzo, CEO and Co-Founder, TruShield Security Solutions Michael Brice, Founder,...

Chief Compliance Officer Roundtable: Breakfast Briefing

When: October 20, 2016 Where: Blank Rome LLP | The Chrysler Building | 405 Lexington Avenue | New York, NY 10174 | 22nd Floor Boardroom | Phone: 212.885.5000 Thomas Westle and Janaya...

Practicing Law Institute - Hedge Fund Management 2016

When: September 15, 2016 Where: New York & concurrent webcast | 1177 Avenue of the Americas | New York, NY 10036 Schedule: 9:00 am – 5:00 pm Janaya Moscony, President of SEC3 will...

CHIEF COMPLIANCE OFFICER ROUNDTABLE: BREAKFAST BRIEFING

When: April 13, 2016 Where: Blank Rome LLP | The Chrysler Building | 405 Lexington Avenue | New York, NY 10174 22nd Floor Boardroom Thomas Westle and Janaya Moscony, along with industry experts,...

COMPLIANCE SCIENCE SUMMIT 2015

When: November 17, 2015 Where: Convene Midtown East | 730 Third Avenue | New York, NY 10017 Janaya Moscony, President, SEC Compliance Consultants, Inc. will be moderating a...