In context

New SEC chair continues hard-line approach to securities law violations

November 11, 2013
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In context

Mary Jo White, the newly appointed chair of the SEC, recently set the course for the coming years. Her key initiatives continue the hard-line approach the SEC has taken in recent years.

In a recent speech, Ms White highlighted the SEC’s areas of interest for the coming years. The SEC aims to investigate not only large-scale violations of federal securities law, but also less obvious cases. To succeed, the SEC will incentivise the use of the whistleblowing programme. This programme allows the SEC to give monetary rewards for valuable information concerning securities law violations (for further information, please read “SEC’s largest award ever to whistleblower”). In addition, the SEC will pursue gatekeepers in the financial system who fail to perform their tasks, including auditors. The SEC will also continue its investigations into how high frequency trading may harm the current market structure and practices.

 

The SEC has pursued a number of high profile cases in recent years. In 2013 alone the SEC

  • reached a USD 200 million settlement with JP Morgan, as part of a bigger settlement among multiple supervisory authorities, for failing to have internal controls and for misstating their financial results
  • demonstrated in the Galleon case that it is willing and able to take on high level executives. See our RCE Newsletters for more information.
  • signalled its seriousness in pursuing errant financial system gatekeepers. It charged Paul Konigsberg, Bernard Madoff’s accountant, for his role in creating the false books and records used in the massive Ponzi scheme. According to the SEC, Konigsberg assisted in creating inaccurate trade confirmations as well as phony data and records documenting fabricated trades that were falsely accounted for in Bernard Madoff Investment Securities books and records. The SEC investigation is on-going.
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