SEC Sheds Light on Its Pursuit of "Streamlined" Investigations

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Securities market participants and their counsel have fretted recently over the Securities and Exchange Commission’s (the Commission) new aggressive enforcement initiatives. In particular, in several recent speeches, Chairwoman Mary Jo White has warned that she intends for the Commission to be perceived as "being everywhere" by bringing enforcement actions against violators in "every market participant category and in every market strata." Accordingly, Ms. White has vowed to pursue "even the smallest infractions." Many have questioned the efficacy of this approach given that Commission officials have pledged simultaneously to continue bringing large cases, particularly time- and resource-intensive accounting fraud cases. Recently, Gerald Hodgkins, an Associate Director in the Commission’s Division of Enforcement, shed light on how the Commission will seek to accomplish these conflicting goals – by conducting "streamlined" investigations into strict liability violations.

Mr. Hodgkins, speaking at a National Association of Criminal Defense Lawyers Conference in Washington, DC on October 24, explained that Commission officials have grappled with how to pursue small cases without impeding the agency’s ability to devote adequate resources to its higher priority large cases. The Commission’s resolution is to conduct "streamlined" investigations of small violations. Specifically, Mr. Hodgkins explained how the Enforcement Division utilized a streamlined investigation process in connection with the agency’s recent charges against 23 securities firms for violations of Rule 105 of Regulation M (Rule 105 Actions).

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Topics:  Enforcement, Investigations, Mary Jo White, SEC

Published In: Business Torts Updates, General Business Updates, Finance & Banking Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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