Legal Times
Moreover, assessing penalties is by no means the only objective of the SEC. In cases against individuals, other forms of relief can be of great importance, such as banning a violator from the securities industry or from serving as an officer or director of a public company. Similarly, in cases against companies, the SEC frequently seeks to achieve meaningful corporate reform, such as effecting changes in management, improving the company's culture of compliance and enhancing the company's policies and procedures.
A bipartisan pair of U.S. senators, Jack Reed (D-R.I.) and Charles Grassley (R-Iowa), recently introduced a bill that would substantially increase specified statutory limits, improving the SEC's ability to punish recidivist offenders and to assess penalties that take into account the magnitude of investor losses. No action has yet been taken on this bill. The existing limits on the SEC's authority may help to explain why Coffee views some SEC penalties as inadequate and believes that significant policy changes are warranted.
While debate about these issues should be encouraged, any debate should start with a fair and complete description of the facts. Coffee does not do the SEC's enforcement record justice.
Robert S. Khuzami is director, and George S. Canellos is deputy director, of the Enforcement Division of the U.S. Securities and Exchange Commission.
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