When The SEC Speaks, You Should Listen: Highlights From The 2014 SEC Speaks Conference

It’s that time of the year again, when the Securities and Exchange Commission announces its priorities at its annual “SEC Speaks Conference.” Here’s a look at key takeaways, from attorneys at Perkins Coie:

A move from rule-making to rule enforcement:

“During their annual turn on the bully pulpit, several of the Commissioners themselves remarked that the congressional rule-making mandates of the Dodd-Frank Act and the JOBS Act have profoundly affected the scope and priorities of the SEC, which has in turn adversely impacted both staff morale and enforcement resources.  Emerging into what was characterized as the “post-financial crisis” world, the SEC leadership also noted that the market in many ways has become more complex and less transparent.  To face these new challenges, the SEC stands ready to use its traditional statutory toolbox, enhanced by hundreds of newly enacted rules and technological resources, to identify and investigate financial fraud.  However, given the overwhelming task at hand, the real question may likely be not when, but whether, the market’s watchdogs can gain sufficient traction to capitalize on their new arsenal in some meaningful fashion.”

Ongoing focus on admissions of wrongdoing:

“Director of Enforcement Andrew Ceresney commented on the increased focus within the SEC of obtaining admissions as part of its settlements.  Director Ceresney also noted that the SEC has recently filed a number of settled matters with admissions of wrongdoing, including the SEC’s February 21, 2014 settlement with Credit Suisse.  […] Echoing Chairman White’s opening comments, Director Ceresney stated that the SEC will continue to aggressively pursue admissions of wrongdoing in cases with egregious misconduct that either harmed, or had the potential to harm, investors.”

Aggressive FCPA enforcement to continue:

“Kara Brockmeyer, Chief of the SEC’s Foreign Corrupt Practices Act (FCPA) Unit, noted that while enforcement activities seemingly tapered in fiscal year 2013, the FCPA Unit was off to a strong start in 2014, having brought an equal number of cases so far in this fiscal year as it did all last year.  She stated that the SEC will continue to bring cases that span “old school” bribery, e.g., Weatherford and Alcoa; travel and entertainment abuses, e.g., Diebold; and even cases involving improper charitable donations, such as the allegations included in the Stryker action.  She also noted that companies can expect to see more cases resolved in administrative proceedings, and that the FCPA Unit is considering bringing litigated FCPA cases through administrative proceedings as well.”

Increased reliance on big data:

“Jina Choi, the San Francisco Regional Director, reflected on the SEC’s increasing reliance on technological tools to detect and prosecute fraud in light of the limited resources available to the SEC.  Choi cited as examples i2 analyst notebooks and an analytical platform that the agency is developing to marry internal SEC data with external documents.  She also highlighted the importance of the SEC’s digital forensic lab, which allows the SEC to preserve, collect and analyze information on electronic devices, even when that information has been deleted or wiped.  These tools permit the SEC to monitor and analyze much more activity and data than it otherwise could with manpower alone.”

Evolving litigation strategy:

“Joseph Brenner, the Chief Counsel of Enforcement, observed that the SEC is utilizing statutes and rules that either had never been employed before, or had not been used in a very long time, to refine its enforcement efforts.  He indicated that post-Janus, a 2011 U.S. Supreme Court ruling limiting the circumstances in which securities fraud defendants can be held primarily liable for the misstatement of others, the Enforcement Division will likely enhance its use of section 20(b) of the Exchange Act because the statute does not require proof of an underlying primary violation in order to impose liability in certain false statement cases.”

Read the full update: The SEC Speaks In 2014: Enhanced Statutory Regime Combined With Data Analytics Tools Results In Enforcement 2.0 – Travis Exstrom, Jalina Joy Hudson, Regina LaMonica, Jose Lopez, and Pravin Rao of Perkins Coie

Also see: The SEC Speaks. Are You Listening? – JD Supra Contributors

More on the Securities and Exchange Commission at JD Supra Business Advisor>>

[Photo credit: SEC.gov]