SEC Announces Enforcement Initiatives
In a speech before the New York City Bar Association, marking the end of his first 100 days as director of the Securities and Exchange Commission Division of Enforcement, Robert Khuzami formally announced several changes to the Enforcement program.
Compliance Week reported that under a newly implemented rule, the commission has now amended its rules to “delegate authority to the Director of the Division of Enforcement to issue formal orders of investigation.” In addition, Khuzami announced the formation of five specialized units within the Enforcement Division: asset management, structured products, municipal securities and public pensions, foreign corrupt practices, and market abuse.
A sixth specialized group focused on subprime mortgage abuses already exists, according to the news report.
A new Office of Market Intelligence will be created, responsible for collecting, analyzing, and monitoring the hundreds of thousands of tips the SEC receives each year.
Khuzami also announced that he will require his staff to get his permission in advance of any tolling agreements, in which subjects of investigations are asked to give the SEC more time to look into suspected misconduct than statute of limitations typically allow. Such agreements are becoming far too common, he said, according to the news report, and might undermine the SEC’s “message of prompt accountability.”
The branch chief position, which is the lowest and largest tier of management in the Enforcement Division, is being eliminated. Khuzami said some current branch managers will become front-line investigators, and others may be promoted to the position of assistant director.
Khuzami’s speech is here.
The SEC is also advocating that it should be funded directly from industry fees. SEC Chair Mary Schapiro asserted such a system would let the agency tackle more complex investigations and put more resources into technology and attracting skilled financial investigators (see “SEC Head Pushes for Self-Funding Plan”).