{"id":5248,"date":"2011-12-29T00:00:00","date_gmt":"2011-12-29T06:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2011\/12\/sec_seeks_to_impose_tougher_pe_1"},"modified":"2022-04-14T14:38:04","modified_gmt":"2022-04-14T19:38:04","slug":"sec-seeks-to-impose-tougher-pe-1","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/sec-seeks-to-impose-tougher-pe-1\/","title":{"rendered":"SEC Seeks to Impose Tougher Penalties for Securities Fraud"},"content":{"rendered":"

The Securities and Exchange Commission has issued a proposal seeking to impose larger penalties on wrongdoers. The proposal comes in the wake of criticism that the agency isn\u2019t doing enough to punish the persons and entities that played a role in the recent credit crisis and calls for:<\/p>\n

\u2022\tCapping fines issued against individuals at $1 million\/violation rather than just $150,000.
\n\u2022\tRaising penalties against firms from $725,000\/action to $10 million.
\n\u2022\tMultiplying by three how much the SEC can seek using an alternative formula that calculates the violator\u2019s gains.
\n\u2022\tPermission to determine penalties according to how much investors lost because of an alleged misconduct.
\n\u2022\tPermission to triple the penalty if the defendant is a repeat offender and has committed securities fraud<\/a> within the last five years.<\/p>\n

The proposal was included in a letter sent to Senator Jack Reed by SEC Chairman Mary Schapiro last month. Reed heads up a subcommittee that oversees the Commission. In her letter, Schapiro said she believed the proposed changes would \u201csubstantially\u201d improve the agency\u2019s enforcement program.<\/p>\n

The SEC has come under fire for failing to detect a number of major scandals before they blew up, including the Madoff Ponzi scam <\/a>and the Enron fraud. Recently, US District Judge Jed Rakoff, who rejected the SEC\u2019s proposed $285 million securities settlement with Citigroup<\/a>, questioned a system that allows wrongdoers to pay a fine, as well as other penalties, without having to admit or deny wrongdoing. Now, the Commission appears to be working hard to rehabilitate its image so that it can be thought of as an effective and credible regulator of the securities industry.<\/p>\n

According to Investment News, another way that the SEC may be attempting to re-establish itself is by targeting investment advisers. The Commission has reported filing a record 140 actions against these financial professionals in fiscal 2011, which is a 30% increase from 2010. One reason for this may be that a lot of the actions deal with inadequate paperwork that can easily be identified, which is causing the agency to quickly score a lot of \u201csuccesses.\u201d This approach to enforcement is likely allowing the SEC to discover small fraud cases before they turn into huge debacles. (If only SEC staffers had requested the appropriate documents related to trades made by Bernard Madoff\u2019s team years ago, his Ponzi scam may have been discovered before the losses sustained by investors ended up hitting $65 million.<\/p>\n

The agency\u2019s revitalized efforts are likely prompting some financial firms to work harder on compliance. Investors can only benefit from this.<\/p>\n

SEC’s Schapiro Asks Congress to Raise Limits on Securities Fines<\/a>, Bloomberg\/Businessweek, November 29, 2011<\/p>\n

\nMore Blog Posts:<\/strong>
\nSEC Files Charges in $27M Washington DC Ponzi Scam<\/a>, Stockbroker Fraud Blog, November 21, 2011<\/p>\n

Former Fannie Mae and Freddie Mac Executives Face SEC Securities Fraud Charges, Institutional Investor Securities Blog, December 16, 2011<\/p>\n

Banco Espirito Santo S.A. Settles for $7M SEC Charges Alleging Violations of Investment Adviser, Broker-Dealer, and Securities Transaction Registration Requirements, Institutional Investor Securities Blog, November 5, 2011<\/p>\n

Continue Reading \u203a<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The Securities and Exchange Commission has issued a proposal seeking to impose larger penalties on wrongdoers. The proposal comes in the wake of criticism that the agency isn\u2019t doing enough to punish the persons and entities that played a role in the recent credit crisis and calls for: \u2022 Capping fines issued against individuals at […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3760,3761,3741],"tags":[],"class_list":["post-5248","post","type-post","status-publish","format-standard","hentry","category-sec-enforcement","category-securities-and-exchange-commis","category-securities-fraud"],"yoast_head":"\nSEC Seeks to Impose Tougher Penalties for Securities Fraud — Investor Lawyers Blog — December 29, 2011<\/title>\n<meta name=\"description\" content=\"The Securities and Exchange Commission has issued a proposal seeking to impose larger penalties on wrongdoers. 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