Dive Brief:
- Securities and Exchange Commission Enforcement Director Gurbir Grewal said Tuesday that enforcement “should not be a game of gotcha,” but a joint effort by SEC and companies under scrutiny to determine whether a violation has occurred.
- “This should be a collaborative process,” Grewal said in reply to a question at Securities Enforcement Forum West. “It shouldn't be that we're going to hold all of our cards close to the vest and surprise you at the 11th hour and hold something for trial — this is a truth-seeking mission that we're on.”
- “The most effective resolutions that I've seen are ones where an attorney has come in well before a formal process and said, ‘I know you're looking at this, but have you thought about these facts, or have you looked at something this way?’” Grewal said. Such dialogue sometimes prompts the SEC not to pursue an investigation, he said.
Dive Insight:
Grewal’s division during fiscal year 2022 — his first full fiscal year as enforcement director — ordered a record $6.4 billion in civil penalties, disgorgement and prejudgment interest compared with a total of $3.9 billion the prior year.
The division filed 760 total enforcement actions during fiscal year 2022, a 9% increase compared with the prior period.
Since taking his current post nearly two years ago, Grewal said he has sought to restore public trust in the markets, particularly after regulators failed to hold large financial institutions accountable for wrongdoing.
“I laid out my priorities to rebuild that trust, and that was to focus on robust enforcement, to focus on robust penalties,” Grewal said to an audience primarily made up of attorneys, highlighting the SEC’s aim to “work with each of you to create a culture of proactive compliance.”
Declining investor confidence in crypto markets and recent bank failures underscore the imperative for building trust through active enforcement that holds wrongdoers accountable, he said.
Grewal highlighted SEC enforcement efforts against auditors, lawyers, transfer agents and other gatekeepers.
The agency will also take action against “insiders who abuse their positions who take advantage of information asymmetries to profit themselves,” Grewal said, noting insider trading abuses. “Again, that diminishes trust.”
