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How would a cash settlement meaningfully further the SEC's goal of protecting investors?

by romed 8y ago

toomuchtodo 8y ago
No actions by the SEC meaningfully furthers their goal of protecting investors. They extract a fine, the party in question doesn't need to admit guilt, and the cycle continues. Occasionally, they send someone to jail to prove a point (Martin Shkreli), but out of their limited enforcement actions, it is rare. https://www.dandodiary.com/2018/05/articles/regulatory-enforcement-2/sec-public-company-enforcement-action-continue-steep-decline-first-half-fy-2018/ https://www.dandodiary.com/2018/05/articles/regulatory-enfor... (SEC Public Company Enforcement Action Continue Steep Decline in First Half FY 2018) > According to the report, the SEC filed 15 new enforcement actions against public companies and their subsidiaries in the first half of FY 2018, representing a 67 percent decline from the 45 enforcement actions the SEC filed in the first half of FY 2017. The number of enforcement actions filed in the first half of 2018 is significantly below the average of 29 enforcement actions filed per half year during the period FY 2010 through FY 2017, and below the median of 26 actions per half year filed during that same time period. The 15 enforcement actions filed against public companies and their subsidiaries in the first half of 2018 is the lowest half year filing total since the first half of FY 2013, when there were 12 filings. > The current trend toward significantly reduced numbers of enforcement actions against public companies and their subsidiaries began in the second half of 2017. In the last half of the 2017 fiscal year, the SEC filed only 17 enforcement actions against public companies and their subsidiaries, compared to 45 actions filed in the first half of FY 2017. Citigroup fraud cost investors hundred of millions of dollars. The SEC fined them $10 million. The SEC seems...less than effective in encouraging above board behavior by public companies. The fine is simply a cost of doing business. https://www.sec.gov/news/press-release/2018-155-0 https://www.sec.gov/news/press-release/2018-155-0 (Citigroup to Pay More Than $10 Million for Books and Records Violations and Inadequate Controls) > The Securities and Exchange Commission today announced that Citigroup has agreed to pay $10.5 million in penalties to settle two enforcement actions involving its books and records, internal accounting controls, and trader supervision. The charges stem from $81 million of losses due to trader mismarking and unauthorized proprietary trading and $475 million of losses due to fraudulently-induced loans made by a Mexican subsidiary.
- wgerard 8y ago
  The SEC isn't the DOJ. They can't enforce criminal penalties. Their agency is pretty restricted in what they're allowed to do; the strictest penalties they're allowed to enforce include barring people from: * Managing securities * Being on the board of directors of a public company * Being an executive of a public company If your complaint is that people don't feel enough pain from their actions, blame the DOJ not the SEC. > Occasionally, they send someone to jail to prove a point (Martin Shkreli) To reiterate, Martin Shkreli was charged by the DOJ, not the SEC.
  - toomuchtodo 8y ago
    My point was that the SEC either doesn't have the teeth or doesn't care to have any meaningful impact in protecting investors, and I think I proved that point based on their enforcement statistic. "Stop! Or I'll take a bit of change from your pocket and say stop again!" Your point about Shkreli is taken. I agree he committed a crime, I disagree it deserved prison time.
    - wgerard 8y ago
      I guess, I feel like all you've shown is that the SEC's teeth have been filed down the past couple years. That makes sense to me given the current administration's overall stance towards regulation and enforcement. It's well in line with other enforcement agencies similarly being neutered under the current administration, and doesn't necessarily portend anything for the future (EDIT: Beyond the next two years, obviously).
    - true_religion 8y ago
      Sure the SEC, does not have broad enforcement powers but most federal agencies don't. The FBI famously chases down serial murderers, but they can't charge them with crimes either. Most agencies have a police wing, but like most police, they refer your case to the DA who may charge you. If Citi isn't charged here, then it's the DOJ at fault. They got the investigation report and chose not to act.

How would a cash settlement meaningfully further the SEC's goal of protecting investors?

by romed 8y ago

How would a cash settlement meaningfully further the SEC's goal of protecting investors?

No actions by the SEC meaningfully furthers their goal of protecting investors. They extract a fine, the party in question doesn't need to admit guilt, and the cycle continues. Occasionally, they send someone to jail to prove a point (Martin Shkreli), but out of their limited enforcement actions, it is rare. https://www.dandodiary.com/2018/05/articles/regulatory-enforcement-2/sec-public-company-enforcement-action-continue-steep-decline-first-half-fy-2018/ https://www.dandodiary.com/2018/05/articles/regulatory-enfor... (SEC Public Company Enforcement Action Continue Steep Decline in First Half FY 2018) > According to the report, the SEC filed 15 new enforcement actions against public companies and their subsidiaries in the first half of FY 2018, representing a 67 percent decline from the 45 enforcement actions the SEC filed in the first half of FY 2017. The number of enforcement actions filed in the first half of 2018 is significantly below the average of 29 enforcement actions filed per half year during the period FY 2010 through FY 2017, and below the median of 26 actions per half year filed during that same time period. The 15 enforcement actions filed against public companies and their subsidiaries in the first half of 2018 is the lowest half year filing total since the first half of FY 2013, when there were 12 filings. > The current trend toward significantly reduced numbers of enforcement actions against public companies and their subsidiaries began in the second half of 2017. In the last half of the 2017 fiscal year, the SEC filed only 17 enforcement actions against public companies and their subsidiaries, compared to 45 actions filed in the first half of FY 2017. Citigroup fraud cost investors hundred of millions of dollars. The SEC fined them $10 million. The SEC seems...less than effective in encouraging above board behavior by public companies. The fine is simply a cost of doing business. https://www.sec.gov/news/press-release/2018-155-0 https://www.sec.gov/news/press-release/2018-155-0 (Citigroup to Pay More Than $10 Million for Books and Records Violations and Inadequate Controls) > The Securities and Exchange Commission today announced that Citigroup has agreed to pay $10.5 million in penalties to settle two enforcement actions involving its books and records, internal accounting controls, and trader supervision. The charges stem from $81 million of losses due to trader mismarking and unauthorized proprietary trading and $475 million of losses due to fraudulently-induced loans made by a Mexican subsidiary.

wgerard 8y ago
The SEC isn't the DOJ. They can't enforce criminal penalties. Their agency is pretty restricted in what they're allowed to do; the strictest penalties they're allowed to enforce include barring people from: * Managing securities * Being on the board of directors of a public company * Being an executive of a public company If your complaint is that people don't feel enough pain from their actions, blame the DOJ not the SEC. > Occasionally, they send someone to jail to prove a point (Martin Shkreli) To reiterate, Martin Shkreli was charged by the DOJ, not the SEC.
- toomuchtodo 8y ago
  My point was that the SEC either doesn't have the teeth or doesn't care to have any meaningful impact in protecting investors, and I think I proved that point based on their enforcement statistic. "Stop! Or I'll take a bit of change from your pocket and say stop again!" Your point about Shkreli is taken. I agree he committed a crime, I disagree it deserved prison time.
  - wgerard 8y ago
    I guess, I feel like all you've shown is that the SEC's teeth have been filed down the past couple years. That makes sense to me given the current administration's overall stance towards regulation and enforcement. It's well in line with other enforcement agencies similarly being neutered under the current administration, and doesn't necessarily portend anything for the future (EDIT: Beyond the next two years, obviously).
  - true_religion 8y ago
    Sure the SEC, does not have broad enforcement powers but most federal agencies don't. The FBI famously chases down serial murderers, but they can't charge them with crimes either. Most agencies have a police wing, but like most police, they refer your case to the DA who may charge you. If Citi isn't charged here, then it's the DOJ at fault. They got the investigation report and chose not to act.