CFO.com reported Friday that Securities and Exchange Commission Chair Mary Schapiro has reversed rules put in place by former chairman, Christopher Cox, that required approval from the full commission before the enforcement division can launch a formal investigation into corporate wrongdoing. She also did away with Cox's "penalty pilot" program, which required commission approval before fines were levied against public companies.
Cox reportedly instituted the penalty pilot as a means to avoid the form of double jeopardy against shareholders who have been wounded by financial fraud when a fine is imposed against their company. But in Schapiro's view:
At a time when the SEC needs to be deterring corporate wrongdoing, the "penalty pilot" sends the wrong message. No one should be heard credibly to question whether enforcement is a priority at the SEC.
Wrongdoers should learn, and learn quickly, that the "full force of the law" will be their reward, she said. As a result, requests to launch formal investigations can now be approved by a single commissioner. Neither will the decision to levy fines require full commission approval.