SEC to shift enforcement focus to individuals, White says

The new method: From the person to the firm rather than the firm to the person

Sep 26, 2013 @ 12:45 pm

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(Bloomberg News)

Securities and Exchange Commission Chairman Mary Jo White said her agency will shift its focus to bring more cases against individuals who violate securities laws rather than the companies where they work.

“I want to be sure we are looking first at the individual conduct and working out to the entity, rather than starting with the entity as a whole and working in,” White, 65, said Thursday in a speech in Chicago. “It is a subtle shift, but one that could bring more individuals into enforcement cases.”

The SEC has faced criticism from lawmakers, judges and investors that many of its cases related to the 2008 credit crisis failed to punish high-ranking executives and allowed companies to resolve probes without admitting guilt. White, a former federal prosecutor and defense lawyer who became SEC chairman in April, has already begun seeking admissions of wrongdoing in cases against hedge-fund billionaire Philip Falcone and New York-based JPMorgan Chase & Co.

“Redress for wrongdoing must never be seen as a cost of doing business made good by cutting a corporate check,” White said in remarks prepared for a Council of Institutional Investors conference.

SEC investigators will also seek more mandatory compliance measures in settlements to prevent future misconduct and not just punish past wrongdoing, she said.

White also faces questions from lawmakers and investors about whether the SEC has a grasp on fragmented equity markets that are dominated by high-speed electronic trading and have experienced multiple technical failures in recent years.

The agency needs to be seen bringing cases that cover the “whole market,” White said. Investigators are planning cases in the coming year related to sophisticated trading strategies, dark pools and other trading platforms, she said.

(Bloomberg News)

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