SEC Changes to Enforcement Have Led to Enhanced Results, Says Khuzami

According to Securities and Exchange Commission Enforcement Director Robert S. Khuzami, the restructuring that has recently taken place at that agency’s division is allowing the SEC to not just improve the quality of its efforts but also its results. He spoke at a Practicing Law Institute conference earlier this month.

Not only has the enforcement division set up several specialized units that are each assigned a specific area of enforcement to focus on, but also market specialists from the private sector have been hired. Khuzami also said that the SEC has improved its handling of complex securities cases and is now detecting signs of alleged wrongdoing sooner.

In the last fiscal year, the Commission has opened 735 enforcement cases—a record number—and imposed $3 billion in penalties and disgorgement against alleged offenders. Moving forward, the Commission intends to continue placing a lot of its attention on going after parties that committed securities laws violations related to the economic crisis of 2008. The SEC has so far initiated 107 such securities cases. 74 of these are against individuals.

Khuzami also noted that non-prosecution agreements, deferred prosecution deals, and cooperation agreements, which were first created in early 2010, have been helpful in not just resolving some securities cases more swiftly, but also in allowing investigators to pinpoint certain complex fraud cases. (Deferred prosecution and non-prosecution agreements are deals in which the SEC agreed not to issue an enforcement action in exchange for those suspected of wrongdoing agreeing to work with the SEC, as well as executing any stipulated actions. Cooperation agreements are deals involving where parties that helped with enforcement actions and investigations are given credit). The Commission has entered into over three dozen cooperation agreements already, and more deals, involving deferred prosecution, are expected.

Khuzami also touted the SEC’s whistleblower program, which he says has been getting several quality submissions a day from parties with what appear to be valid claims. David Rosenfeld of the SEC’s New York regional office, who also spoke at the conference, said that pursuing those involved in insider trading was another SEC priority.

Also presenting at the conference were US Department of Justice officials. They said that they are continuing to look for leads in areas of securities law that were considered high priority (insider trading, Ponzi scams, large investment fraud, bank fraud, and market manipulation.) The Justice Department is using a number of tools, including wiretaps and court-ordered telephone surveillance techniques, as part of their enforcement efforts.

At Shepherd Smith Edwards and Kantas, LTD, LLP, we consider it our job to help investors of securities fraud to recoup their losses. Working with an experienced securities fraud law firm increases your chances of financial recovery and of getting back as much of your investment loss as is possible. Contact our SEC securities fraud lawyers today.

SEC Restructuring, DOJ Tactics Improving Securities Enforcement Results, Officials Say, Bloomberg/BNA Daily, April 19, 2012

Enforcement 2012: Multi-Agency Enforcement Efforts, Practicing Law Institute, May 2, 2012

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