Personal Liability and SEC Enforcement

posted in: Compliance | 0

Lest you think the SEC is not serious about holding individuals personally liable, here is an excerpt from a recent speech by Chairperson White:

Individual Liability:  Any discussion of strong enforcement tools must include a discussion of our priority of pursuing individuals.  Personal accountability, of course, is a basic tenet of law enforcement.  And individual accountability, particularly at the most senior levels, is a core part of our enforcement program because firms can only act through their people and it is people to whom we are trying to send our strong message of deterrence.  While some cases, because of the available evidence or charges, are appropriate to bring only against companies, we must always look to identify and charge those people who are responsible for their company’s wrongdoing.  In Fiscal Year 2015, about two-thirds of our substantive actions included charges against individuals.

Redress for wrongdoing can never be seen merely as a cost of doing business made good by cutting a corporate check.  When people fear for their own reputations, careers, or pocketbooks, they are more likely to stay in line.  So when investigating misconduct, our staff first looks at the individual conduct and works out to the entity, rather than starting with the entity as a whole and working in.