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SEC chief charts 2014 enforcement: More admissions and personal liability

Mary Jo White, Chair of the Securities and Exchange Commission, outlined her agency’s regulatory and enforcement priorities for 2014 during a talk Monday at the Annual Securities Regulation Institute.

She said more admissions will be sought. And the SEC will focus more on accounting errors and hold a wider group of executives responsible for them.

The SEC typically didn’t require entities or individuals to admit wrongdoing in a settlement. This framework, White said, allowed for more and quicker settlements and served the public interest.

But admissions of wrongdoing “can achieve a greater measure of public accountability,” she said, and enhance the public’s confidence in law enforcement and the security of the markets.

White and her fellow commissioners modified the SEC’s protocol to demand admissions in more settlements, including:

  • Those involving egregious conduct, where large numbers of investors were harmed
  • Where the markets or investors were placed at significant risk
  • Where the wrongdoer poses a particular future threat to investors or the markets, and
  • Where the defendant engaged in unlawful obstruction of the Commission’s processes

White said the newly formed Financial Reporting and Audit Task Force, made up of accountants and attorneys, will zero in on financial reporting misconduct.

“We look closely at the auditors in every financial reporting case, but we are also closely focusing on senior executives for possible misconduct warranting charges. The message is that critical accounting issues are the responsibility of all those involved in the preparation and review of financial disclosures,” White said.

She said 2014 will be an active one in enforcement, with enforcement across the industry spectrum.

The full text of Mary Jo White’s January 27 talk is here.


Julie DiMauro is the executive editor of FCPA Blog and can be reached here.

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