SEC Commissioners Tout Importance of Enforcement


Securities and Exchange Commission members are lining up to tell anyone who will listen that enforcement is a top priority these days. First, of course, it was the new chairperson, Mary Schapiro, who said early on, "No one should be heard credibly to question whether enforcement is a priority at the SEC."


Last week, Luis Aguilar spoke to the District of Columbia Bar on what he would like to see the SEC do to step up enforcement. A former SEC attorney, Aguilar was appointed to the commission in July to replace the retiring Raul Campos. According to Compliance Week, Aguilar made four suggestions:

  • Corporate financial penalty guidelines dhould be revised. Determining whether a penalty is appropriate should be based upon the nature of the misconduct/violation, the nature of the defendant (governance structure, conduct prior to the problem), whether the defendant has cooperated with authorities and worked to mitigate the damage, and how a financial penalty would affect others outside the defendant.
  • The commission should implement "risk-based data analysis" technology.
  • In addition to the "duty officer," Aguilar suggests authorizing the SEC's enforcement director and the heads of regional offices to issue final orders.
  • SEC settlement funds should be more quickly and fairly distributed to investors.


Aguilar also noted that Congress should act to expand the commission's civil and criminal enforcement authority and to "provide the SEC with an adequate budget." (Realistically, though, is anyone's budget adequate these days? I doubt it.)


This week, SEC Commissioner Troy Peredes told attendees at the Southeastern Securities Conference that case selection is the key in allocating the commission's limited enforcement resources. Compliance Week writer Melissa Klein Aguilar says:

While Paredes said the SEC shouldn't abstain from bringing cases for negligence-based violations, he said, "We need to ensure that we have adequate resources available to dedicate toward aggressively pursuing those who intentionally violate the federal securities laws." For example, he said certain technical violations and mistakes may be better addressed through remedial steps without enforcement action.