Mary Jo White, chairwoman of the U.S. Securities and Exchange Commission (SEC), and James Comey, director of the Federal Bureau of Investigation (FBI), recently discussed enforcement trends and offered advice on how companies can avoid violating federal laws, at the New York City Bar Association’s third annual White Collar Crime Institute.
In her keynote speech, White countered charges of lax SEC efforts against individuals by noting that 83% of its actions since the start of fiscal year 2011 have included charges against individuals. She emphasized the agency's commitment to pursuing individuals for financial crimes, noting the frequent use of Section 20b of the Securities Exchange Act, which imposes primary liability on individuals who use other people to carry out unlawful acts.
White also stated that no entity is too large to go after, referencing a number of large corporations subject to SEC focus. She also mentioned the agency's favorite nonmonetary-enforcement remedies, including barring wrongdoers from working in the industry or appearing before the SEC and using corporate monitors or independent compliance consultants to bring companies into line with regulations. Finally, White reiterated her commitment to eliciting admissions of wrongdoing from companies and holding them accountable.
In Comey’s speech, the FBI director explained the agency's dual goals of combating terrorism and safeguarding the economy. He also responded to claims that the FBI focuses on the most obvious cases and often fails to catch emerging threats or other important — but less obvious —cases. He asserted that the FBI has made significant improvements on both national security and criminal issues, noting a 65% increase in corporate fraud cases since 2008. These cases include mortgage fraud, money laundering and healthcare fraud on both individual and organizational levels. Securities fraud cases consist of microcap market manipulation, investment and accounting fraud and insider trading.
Comey remarked on the limited ability of enforcement to deter crime. Prevention, he said, is more effective through corporate efforts to create a culture of compliance from the top down. He stressed the importance of ethical board leaders and management setting the right example by selecting ethical leaders, punishing unethical behavior and rewarding good behavior.