On October 25th, SEC Chair, Gary Gensler, spoke at the 2023 Securities Enforcement Forum.
Labeling the SEC as “partners of honest business and prosecutors of dishonesty”, Gensler spoke about different topics as the SEC’s fiscal year has ended.
Takeaways from Gensler’s statements made are below.
- Gensler uses aggressive language to describe the intensity of the SEC’s commitment to their regulatory agenda with two quotes from history:
- A reference to the SEC making “war without quarter” on people who partake in fraud or misrepresentation while selling securities.
- Another quote from Joseph Kennedy explaining that the SEC are not prosecutors of honest business.
- The SEC has filed more than 780 actions in the fiscal year, with judgements and orders totaling $5 billion.
- The accountability Gensler is seeking applies to individuals as well as Firms.
- 2/3 of the charges also saw individual actors charged instead of just the firm.
- A record 133 bars on individuals from serving as officers and directors in 2023.
- High-impact cases are not an attempt to regulate through enforcement, but to gain the attention of the industry to change behavior and bring greater compliance with the law.
- The SEC values a process that promotes fairness, cooperation, timeliness, following the facts where they lead.
- Numerous actions involved zero or reduced penalties because of the respondent’s cooperation.
- The SEC received over 40,000 tips, complaints, and referrals in the previous fiscal year.
- Gatekeepers have an essential role in establishing trust in the marketplace, and those abusing that trust will be held accountable.
- Auditors, lawyers, underwriters, and compliance professionals are some examples of gatekeepers.
As Gensler continues to highlight the record-breaking going on at the SEC, we are reminded that the current intensity of the regulatory environment will likely continue.
An aggressive and dynamic regulatory climate puts significant strain on compliance departments, especially if resources are lacking.