In recent remarks to the Securities Enforcement Forum, SEC Chairperson Mary Jo White stated that one of the SEC’s goals for its enforcement program is to be “everywhere, pursuing all types of violations of our federal securities laws, big and small.” She likened the approach to the “broken windows” policy pursued during the 1990s by then-New York City Mayor Rudy Giuliani, who regarded no infraction too small to be “uncovered and punished”. Chairperson White noted that the SEC’s Division of Enforcement would pursue not just the biggest frauds, but also more minor violations such as control failures and negligence-based offenses, among others.
As an example of the SEC’s efforts to target violations and violators regardless of size, Chairperson White noted the nearly two dozen enforcement actions brought by the SEC for violations of Rule 105 of Regulation M, which prohibits improperly participating in public offerings for a period of time after short-selling those same securities (a link to a related Ropes & Gray Alert can be found here). She noted that these actions yielded disgorgements ranging from as high as $2.5 million to as low as $4,000. Chairperson White subsequently tempered her comments with regard to minor violations, noting that “it’s not a game of gotcha” and that the SEC does not seek to bring an enforcement action in response to every minor violation, but intends to address such violations through engagement, deficiency letters, and other approaches short of enforcement action.
Chairperson White stated that while the SEC intends to target smaller violations, it will continue to focus significant attention on larger and more complicated cases. She noted that the SEC will strive for settlements “that have a deterrent effect, and where appropriate, the added measure of public accountability that an admission often brings.” Chairperson White’s full speech can be found here.