June/July 2010 / Governance
Regulatory Developments at the SEC
The SEC has issued new policies for handling securities investigations. They include encouraging high level officials and other individuals to cooperate in SEC investigations; streamlined procedures for issuing subpoenas and quickly pursuing investigations; creation of five new units in the Division of Enforcement to focus on priority areas; and new enforcement priorities. The latter include “pay to play” practices of investment advisers, regulation of companies doing business with foreign countries, insider trading and hedge funds.
In January 2010, the SEC formally extended a policy to encourage individuals to cooperate. It encourages the SEC to “carefully consider the use of cooperation by individuals and companies to advance its investigations and related enforcement actions.”
The SEC identified four considerations in weighing cooperation: help provided; importance of the matter; ensuring that the individual is held accountable; appropriateness of cooperation credit in the individual’s case.
The SEC also announced that it had created five specialized investigative units in the Division of Enforcement dedicated to priority areas, and an Office of Market Intelligence. Restructuring increases the investigative staff with expertise in financial services, markets and products, and will presumably result in more efficient investigations and swifter reactions. There is likely to be faster issuance of subpoenas, and more aggressive investigations, especially in areas the SEC has designated as a priority.
