(Reuters) – The US Securities and Exchange Commission on Wednesday signaled that it would take an increasingly aggressive stance with business leaders and gatekeepers, including a greater focus on seeking guilty pleadings.
In remarks highlighting the importance of building investor confidence in corporate America and the financial markets, SEC Executive Director Gurbir Grewal said the agency will seek these measures, marking a turnaround in the strategy of the top US market regulator and the latest example of a change under new leadership since President Joe Biden took office in January.
For many companies, executives and gatekeepers such as lawyers and accountants do not follow the rules, fail to implement compliance procedures or cover direct fraud, Grewal said. Such misconduct undermines public confidence, he said.
"We will, under appropriate circumstances, require admission to places where responsibility and acceptance of responsibility are in the public interest," Grewal said at an industry conference.
Historically, many of the Agency's resolutions were completed with public companies, financial companies and executives without the parties acknowledging or denying the Agency's fees. In 201
But academic research shows that the remedy was still used very infrequently and saw little change when SEC executives under the Trump administration signaled a shift from that strategy.
On Wednesday, SEC officials signaled other changes underway in their plans to deal with market misconduct, highlighting that failure to maintain necessary communications or use technology that allows messages to disappear can be seen as a distortion of evidence. This would increase the efforts of business actors.
Officials also outlined an effort for tighter timelines during enforcement negotiations.
When applying for credit for cooperation, companies will not be made easier because they only fulfill their obligations to produce documents, says Sanjay Wadhwa, SEC's Deputy CEO. They will need to meaningfully promote the "quality and effectiveness" of the inquiry, he said.
"Cooperation is not just the absence of obstacles," he said.