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May 08, 2015 at 09:12 AM
Securities and Exchange Commission Chairwoman Mary Jo White told the lawyers in attendance at the 47th annual Rocky Mountain Securities Conference, co-sponsored by the SEC and the Business Law Section of the Colorado Bar Association, that she was “proud of the progress” the SEC has made in reducing risk to investors in the asset management industry.
Litigation at the SEC has increased, with 755 enforcement actions in 2014, up from 676 in 2013. Of those, 166 were against broker-dealers and 130 were against investment advisors or investment companies. White said on Thursday, “As we get more aggressive, you’ve got to be prepared to litigate.”
She noted that considering the SEC’s limited exam resources, examiners have “worked miracles.”
White said that focusing on individuals rather than institutions was a better deterrent against wrongdoing, but added that the “tone at the top” needs to emphasize the importance of compliance through “constant messaging. It has to become the zeitgeist,” she said.
Andrew Ceresney, director of the SEC’s division of enforcement, said in a separate panel that taking action against individuals was harder due to jurisdiction and evidentiary burdens.
Although technology resources have improved at the SEC and the agency has more data to work with in examining advisors, White emphasized the importance of experienced staff. She said technology needs examiners who can exercise judgment on what the data is showing and “what it means.” She said, “Technology will always require the judgment of examiners.”
Still, she said the SEC’s near-term initiatives included gathering more data on registrants and applying it in more useful ways. Other initiatives include a focus on transition planning to ensure that firms are doing all they can to protect their clients if the firm changes hands.
In the enforcement panel, Ceresney said it’s a “great time to be in enforcement” due to the supportiveness of Mary Jo White as chairwoman and the other commissioners.
He noted the increasing number of enforcement cases and said that’s “not going to let up” in the next few months.
Ceresney recommended that when firms discover wrongdoing they consider self-reporting. He said people are beginning to recognize that if “you don’t tell us, we’ll probably hear about it from someone else.”
