Earlier this winter, SEC Chair Mary Jo White addressed the Securities Enforcement Forum and outlined some of the issues that the SEC will focus on in 2014. Highlights of her speech follow:
- Addressing Small Infractions: Working on the broken window premise, the SEC wants to send a message by engaging in enforcement not only for large, egregious infractions, but also smaller offenses. Violations of any size – even those that do not result in investor harm – will now be taken very seriously by the SEC.
- Wider Reach through Collaboration: By increasing communication with other regulatory organizations and using technology more effectively, the SEC is looking to widen its reach and develop its network for more effective monitoring.
- Working with Whistleblowers: By encouraging whistleblowers to come forward, the SEC can track complaints over a wider area.
- Operation Broken Gate: The SEC has launched a program designed to identify auditors who neglect their duties and the required auditing standards; this monitoring of “gatekeepers” is intended to weed out infractions on advising and auditing levels in parallel.
- Prioritizing Larger Cases: A new group, the Financial Reporting and Audit Task Force, has been created with the purpose of using data analytic tools to identify high-risk companies, as well as on “street sweeps.”
What does this mean for independent financial advisors? For our industry, it underlines the importance of not just continuing to comply with the current regulations, but that it is crucial to stay updated on regulatory developments so this constantly-changing set of rules and can be monitored and appropriate compliance practices can be put into place.