Securities regulation conference details "new era" of financial enforcement
The financial collapse of the past two years has led to "a sea change" in enforcement by Securities and Exchange Commission, according to SEC attorney Michael Liftik.
"It's hard to overstate the sea change in the enforcement division over the last year," he said. "We've tried to get ahead of the game a little bit."
Liftik, who is based in San Francisco, summarized the new enforcement initiatives at a conference last month on securities regulation. The conference, held at the Multnomah Athletic Club in Portland, was sponsored by Willamette University College of Law's Program in Law and Business. Organized by Professor Peter Letsou and Professor Meyer Eisenberg, the all-day conference featured former SEC commissioner Roel Campos as the keynote speaker.
Some of the SEC's new initiatives include the creation of specialized units such as the Office of Market Intelligence, which aggregates tips from whistleblowers. Subpoenas no longer need the signatures of all five commissioners. The agency is trying to hire industry professionals -- rather than attorneys fresh out of law school -- to provide in-house expertise on exotic financial instruments.
"We should be a little nimbler and quicker on our feet," Liftik said. "It's supposed so streamline our organization."
The initiatives come in the wake of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which Congress passed over the summer. It's the most comprehensive financial reform since the Great Depression and requires regulators to create at least 243 new rules.
A new office called the Financial Stability Oversight Council will identify and respond to threats to the financial stability of the U.S. The office will decide, for instance, when a financial institutions pose systemic risk to the U.S. economy and which do not.
In addition to discussing developments in private securities litigation, including the U.S. Supreme Court's landmark mutual fund decision in Jones v. Harris Associates, conference panelists also discussed changes in state and provincial securities regulation and new federal rules for financial disclosure to shareholders. And at least two panelists warned that the country isn't out of the woods yet.
Meyer Eisenberg, one of the panelists, warned that the next scandal would involve public pension funds. Richard Phillips, senior partner and head of securities at K&L Gates in San Francisco, suggested a different area: home foreclosures.
"It's not over," said Phillips said. "The foreclosure mess is a very fertile ground for investigation."