SEC Securities Policy Roundup: Neither Admit, Nor Deny Policy, Pursuit of Injunctions for Misconduct, and SRO Oversight Get Closer Scrutiny

New SEC Chairman Reviews “Neither Admit, Nor Deny Wrongdoing” Policy
Securities and Exchange Commission Chairman Mary Jo White is taking a closer look at the agency’s practice of letting defendants that settle cases with it not have to admit to or deny the allegations. Critics of the policy have been vocal about how they believe that this lets violators get out of having to be accountable for any wrongdoing while not doing much to prevent them from repeating such actions again. Currently, the U.S. Court of Appeals for the Second Circuit is trying to determine whether a district court acted properly when it turned down the $285M securities settlement reached between Citigroup (C) and the SEC over the financial firm’s involvement in a 2007 collateralized debt obligation.

Testifying in front of Congress in her new role as SEC Chairman for the first time, White spoke about how despite her decision to review the practice, she does believes the policy has saved agency resources while giving investors’ their money back much quickly than if wrongdoing had to be proven.

SEC Seeks Ways to Better Customize Injunctive Relief for Misconduct
According Andrew Ceresney, the SEC’s co-director of enforcement, the agency is continuing to look at whether when seeking injunctions, such relief should be more closely tailored to the actual misconduct in question. Speaking at a conference in DC, Ceresney said that the regulator’s Enforcement Division wants to make injunctions signify more than just an admonishment to defendants. He says that such modifications should become more evident in the months to come.

Usually, SEC injunctive relief involves the agency barring defendants from committing the same alleged future securities law violations in the future. Critics believe that such relief doesn’t really do much.

SEC Commissioner Says SEC Oversight Is Even More Necessary Today
SEC Commissioner Luis Aguilar says that ongoing conflicts of interests and new competitive challenges mandate a “closer working relationship” between the Commission and the industry’s self-regulatory organizations. He also spoke about how it is the agency’s job to reassess how it can best offer appropriate SRO oversight.

Making sure to stress that the views he expressed were his own, Aguilar made his address, The Need for Robust SEC Oversight of SROs, earlier this month. He said that the SEC must continue to enforcement action against SROs that don’t meet their regulatory and legal duties. He noted that SROs must do their job to act as the first line of defense when it comes to overseeing the industry and all market activities, and also, it is the SEC’s job to act against them when they don’t.

Testimony on SEC Budget by Chair Mary Jo White, SEC, May 7, 2013

The Need for Robust SEC Oversight of SROs, SEC, May 8, 2013