The U.S. Securities and Exchange Commission (SEC) published (for public comment) a draft strategic plan, which sets forth its goals and objectives for fiscal years 2014 through 2018. The SEC’s “strategic objectives” include: fostering compliance with federal securities laws; ramping-up efforts to “promptly detect and deter violations of federal securities laws”; and prosecuting violations of federal securities laws and holding violators accountable through “appropriate sanctions and remedies.” Embracing the success its Office of the Whistleblower has achieved thus far, the draft plan capitalizes on the use of tips from whistleblowers.
To foster compliance with securities laws, the SEC plans to take a more proactive approach in communicating with chief compliance officers, senior executives and board members about compliance efforts. To deter and detect securities violations, the SEC intends to:
- enhance surveillance and risk assessment capabilities by gaining access to additional data;
- improve the management of tips, complaints and referrals from whistleblowers;
- encourage whistleblower complaints;
- bolster the expertise of the SEC staff;
- use a variety of tools— including cooperation agreements, deferred prosecution agreements and non-prosecution agreements—to encourage individuals and companies to promptly report violations and provide assistance to the agency; and
- improve the sharing of information between divisions and offices of the Commission and with other regulators.
In addition, to meet its goal of holding violators of securities laws accountable, the SEC plans to:
- utilize specialty groups within the enforcement program;
- enhance timeliness of distributions to wronged investors;
- enhance communications among SEC divisions and offices;
- re-assess its approach to the use of penalties in connection with enforcement recommendations/actions so that penalties have the appropriate punitive and deterrent effect, having in mind avoiding unnecessary harm to shareholders; and
- broaden the range of enforcement sanctions.
Employers should take heed by continuing to modernize and strengthen compliance programs and encouraging whistleblowers to lodge reports through designated channels so that investigations can be promptly and thoroughly conducted.