Wall Street’s Top Cop Takes Harder Line

The Securities and Exchange Commission has ratcheted up its punishment of individuals, more than doubling the typical fine over the past decade amid pressure to prove the agency is tough on Wall Street. The SEC has stepped up its enforcement activity across the board. The agency levied more civil penalties in the first half of this fiscal year, October through March, than over any comparable period since at least 2005, according to an analysis by The Wall Street Journal of the 4,443 penalties imposed by the SEC since October 2004. More in the Wall Street Journal [...]

Regulators Probe Marketing of Hot Private Tech Shares

Securities regulators have launched a broad investigation into whether hedge funds and other investors are improperly selling hot private technology stocks amid a boom in the trading of such shares, people close to the probe say. The regulatory scrutiny, which is at an early stage, follows a March article in The Wall Street Journal that delved into the role of middlemen in the burgeoning market for private shares. The investigation, by the Securities and Exchange Commission, is focused on a burst of new activity recently by people selling pre-IPO shares as valuations of private tech companies have exploded and companies have opted to remain private for longer. More in the Wall Street Journal [...]

Democrats Are Fed Up with the SEC’s Weak Financial Crimefighting

The progressive movement has declared war on the Securities and Exchange Commission (SEC) and its chair, Mary Jo White. An uncoordinated yet scathing series of reports, letters and appeals have honed in on the New Deal-era regulatory body. And the fight is really about the agency’s long-term direction, as vacancies on the commission open up: Will it maintain the same industry-friendly posture of light-touch regulatory enforcement and ineffective rulemaking, or can a shift be made? Given the growing importance of the SEC, reformers are using whatever leverage they have to influence the outcome. You might believe Senator Elizabeth Warren’s 13-page letter to White, expressing personal disappointment with her tenure, kicked off this uproar. But separately, a growing discontent with the SEC has emerged within the financial reform community, and even within the agency itself. Former officials have called the SEC dysfunctional and even warned colleagues from joining up. More on The New Republic [...]

UPDATE 2-SEC seeks public feedback to inform policy for exchange-traded products

U.S. securities regulators are asking the public to weigh in on how new and novel exchange-traded products should be listed, marketed and traded, as part of an effort to potentially write new rules for the sector. The Securities and Exchange Commission cited an ever-increasing number of requests by funds to launch new kinds of complex products and investment strategies. “Exchange-traded products have become an increasingly important investment vehicle to market participants ranging from individuals to large institutional investors,” said SEC Chair Mary Jo White in a statement. More on Reuters [...]

Federal Judge Rules SEC In-House Judge’s Appointment ‘Likely Unconstitutional’

A federal judge ruled Monday that the Securities and Exchange Commission’s use of an in-house judge to preside over an insider-trading case was “likely unconstitutional,” a potential blow to the agency’s controversial use of its internal tribunal. The decision possibly creates a serious headache for the SEC, which is increasingly using its five administrative-law judges to hear its cases, rather than sending them to federal court, legal experts said. Although the ruling was preliminary, and won’t necessarily be duplicated in other federal courts, it could have ramifications for other SEC cases and potentially other federal agencies. More in The Wall Street Journal [...]

SEC Bickering Stalls Mary Jo White’s Agenda

Mary Jo White took the helm of the Securities and Exchange Commission vowing to “expeditiously” finalize its mountain of postcrisis rules. Two years later, that pledge has been thwarted by bickering among its five members. The slow pace of progress has singled Ms. White out for criticism from both Republicans and Democrats, who have faulted her leadership or her approach to regulation and enforcement. The gridlock also has delayed the completion of some probes into financial misconduct. “I have more stamina than anyone I know and need all of it for this job,” Ms. White told a colleague early in her tenure, referring to her demanding schedule, according to people familiar with the conversation. More in The Wall Street Journal [...]

Elizabeth Warren Calls S.E.C. Chief’s Tenure ‘Disappointing’

Senator Elizabeth Warren, the Massachusetts Democrat who has taken on Wall Street banks and the issue of income inequality, is now going after Mary Jo White, the chairwoman of the Securities and Exchange Commission. In a 13-page letter to Ms. White on Tuesday, Ms. Warren called her two-year stewardship of the S.E.C. “extremely disappointing” and not in keeping with the kind of leadership that Ms. White had promised to deliver during her Senate confirmation hearing. The senator said Ms. White had been slow to promulgate rules with regards to chief executive pay and failed to require companies settling enforcement actions to admit to wrongdoing. Ms. Warren also took issue with Ms. White having to recuse herself from too many matters her husband’s law firm has worked on and being too deferential when it came to giving Wall Street investment firms that had pleaded guilty to violating securities laws. More in the New York Times [...]

SEC official blasts waivers for bad-actor banks

A Securities and Exchange Commission official is blasting waivers the financial regulator approved for five banks whose traders manipulated the world’s foreign-exchange market. In an angrily worded dissent, SEC Commissioner Kara Stein refused to support waivers enabling Citigroup, JPMorgan Chase, London-based Barclays, Swiss banking giant UBS and Royal Bank of Scotland to continue normal activities despite the rate-rigging findings. “Allowing these institutions to continue business as usual, after multiple and serious regulatory and criminal violations, poses risks to investors and the American public that are being ignored,” Stein wrote in a statement dated Thursday, one day after the SEC approved the waivers. More on USA Today [...]

Whistleblowers Find SEC Rewards Slow and Scarce

One Sunday afternoon last spring, a Securities and Exchange Commission investigator called Yolanda Holtzee at her Seattle home, asking for her help in catching an alleged con man the press dubbed “the Wolf of Montreal.” Ms. Holtzee had been tracking John Babikian, a Bugatti-driving Canadian accused of multimillion-dollar investment scams, and had tipped the agency about him as part of her longtime interest in fraud in the penny-stock markets. More in the Wall Street Journal [...]

SEC reveals factors behind how it picks courts it uses

The U.S. Securities and Exchange Commission released guidance on Friday about how it decides whether to pursue a case in federal court or before an in-house judge, amid complaints by some defendants that the agency’s administrative court violates their rights. The SEC said that while no strict formula exists, it considers factors including what claims it is pursuing, whether a defendant is associated with a registered entity, and the costs and time involved in litigating in a particular forum. The SEC said it also considers bringing a matter before an administrative law judge if a case raised “unsettled and complex” issues under federal securities laws, given the commission’s “expertise concerning those matters.” More on Reuters [...]