Kenneth C. Oh
Counsel
212-784-6911 koh@sh-law.comAuthor: Kenneth C. Oh|January 19, 2018
The new leadership of the Enforcement Division of the Securities and Exchange Commission (SEC) recently laid out its priorities for the upcoming year and beyond. The agency’s primary focus will be on cybersecurity, retail investors and accountability for individuals.
After much speculation about how enforcement may change under the Trump Administration, the SEC Enforcement Division announced the new priorities in conjunction with its annual report. According to Co-Directors Stephanie Avakian and Steven Peikin, five core principles will guide their enforcement decision-making. Below is a brief summary of what the SEC had to say about each principle:
The SEC also announced the creation of two new enforcement units. The Division of Enforcement created a new Cyber Unit to focus exclusively on risks posed by cyber-related misconduct. The Cyber Unit will focus on market manipulation schemes involving false information spread through electronic and social media; hacking to obtain material nonpublic information and trading on that information; violations involving distributed ledger technology and initial coin offerings (ICOs); misconduct perpetrated using the dark web; intrusions into retail brokerage accounts; and cyber-related threats to trading platforms and other critical market infrastructure.
The SEC also formed the Retail Strategy Task Force, which will be dedicated to developing effective strategies and methods to identify potential harm to retail investors. The Task Force will focus on wrongdoing that typically targets retail investors, including Ponzi schemes and offering frauds. It will also will focus on identifying misconduct that “occurs at the intersection of investment professionals and retail investors”, such as steering clients to higher-cost mutual fund share classes, abuses in wrap-fee accounts, investment adviser recommendations to buy and hold highly volatile products like inverse exchange-traded funds, suitability issues involving the sale of structured products to retail investors, and abusive sales practices such as churning and excessive trading.
Overall, the SEC report does not reflect a major shift in enforcement or examination priorities. The agency had already been increasing its focus on cybersecurity and retail investors. The most significant change is likely the greater focus on individual accountability. As highlighted by the SEC Enforcement Division, one or more individuals have been charged in more than 80 percent of the standalone enforcement actions the agency has brought since Commissioner Jay Clayton took the helm.
If you have any questions or if you would like to discuss the matter further, please contact me, Kenneth Oh, at 201-806-3364.
Counsel
212-784-6911 koh@sh-law.comThe new leadership of the Enforcement Division of the Securities and Exchange Commission (SEC) recently laid out its priorities for the upcoming year and beyond. The agency’s primary focus will be on cybersecurity, retail investors and accountability for individuals.
After much speculation about how enforcement may change under the Trump Administration, the SEC Enforcement Division announced the new priorities in conjunction with its annual report. According to Co-Directors Stephanie Avakian and Steven Peikin, five core principles will guide their enforcement decision-making. Below is a brief summary of what the SEC had to say about each principle:
The SEC also announced the creation of two new enforcement units. The Division of Enforcement created a new Cyber Unit to focus exclusively on risks posed by cyber-related misconduct. The Cyber Unit will focus on market manipulation schemes involving false information spread through electronic and social media; hacking to obtain material nonpublic information and trading on that information; violations involving distributed ledger technology and initial coin offerings (ICOs); misconduct perpetrated using the dark web; intrusions into retail brokerage accounts; and cyber-related threats to trading platforms and other critical market infrastructure.
The SEC also formed the Retail Strategy Task Force, which will be dedicated to developing effective strategies and methods to identify potential harm to retail investors. The Task Force will focus on wrongdoing that typically targets retail investors, including Ponzi schemes and offering frauds. It will also will focus on identifying misconduct that “occurs at the intersection of investment professionals and retail investors”, such as steering clients to higher-cost mutual fund share classes, abuses in wrap-fee accounts, investment adviser recommendations to buy and hold highly volatile products like inverse exchange-traded funds, suitability issues involving the sale of structured products to retail investors, and abusive sales practices such as churning and excessive trading.
Overall, the SEC report does not reflect a major shift in enforcement or examination priorities. The agency had already been increasing its focus on cybersecurity and retail investors. The most significant change is likely the greater focus on individual accountability. As highlighted by the SEC Enforcement Division, one or more individuals have been charged in more than 80 percent of the standalone enforcement actions the agency has brought since Commissioner Jay Clayton took the helm.
If you have any questions or if you would like to discuss the matter further, please contact me, Kenneth Oh, at 201-806-3364.
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