Better Markets Rips SEC’s Double Standard

Andrew Ceresney, the enforcement chief at the Securities and Exchange Commission (SEC), went before the House Financial Services Committee today, laid out his program and put on the table the SEC’s budget request — including hiring 93 additional staff for the enforcement division.

All the hires in the world won’t make a difference unless the SEC eliminates its double standard of justice.

That’s the take of Dennis Kelleher of Better Markets.

Andrew Ceresney

Andrew Ceresney

“Even after the financial crisis hurt so many American families who lost their homes, jobs and savings, the SEC’s Enforcement Division perpetuates a double standard of justice,” Kelleher said. “It throws the book at low level actors while letting the wealthy and well-connected too big to fail Wall Street banks and their executives off with, at most, slaps on the wrist. This persistent pattern incentivizes more lawlessness on Wall Street, where there is little fear of getting caught or getting meaningfully punished if they’re caught at all.”

“Enforcing the law in the suites is as important as doing so on the streets,” Kelleher said. “The SEC Enforcement Division must go after Wall Street’s industry leaders, executives and supervisors with the same zeal they go after others.”

“They need to require Wall Street’s biggest banks to fully disclose all the facts of the law-breaking, detail how the penalties paid fit the crime, how the action will actually deter future crime, and, no matter what, bring actions against the individuals responsible and bar them from the industry.”

In his testimony, Ceresney did say that the SEC is increasingly seeking to force corporations and individuals to admit to their wrongdoing.

“In June 2013, the Commission changed its long-standing settlement protocol by requiring admissions of misconduct in certain cases where heightened accountability and acceptance of responsibility by a defendant are appropriate and in the public interest,” Ceresney said.

These include cases where the violation of the securities laws involves particularly egregious conduct, where large numbers of investors were harmed; where the markets or investors were placed at significant risk, where the conduct obstructs the Commission’s investigation,  where an admission can send an important message to the markets, or where the wrongdoer poses a particular future threat to investors or the markets.

“While, for reasons of efficiency and other benefits, most cases will continue to be resolved on a neither admit nor deny basis, if admissions or other acknowledgements of wrongdoing are important, the Division will insist on obtaining them and is fully prepared to litigate if necessary,” Ceresney said.

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