The Securities and Exchange Commission (SEC) has been criticized in the past for being overly aggressive in its enforcement actions. It should come as no surprise that regulators are going to regulate, and the SEC sometimes appears to be a hammer looking for a nail to pound. This can lead to overly aggressive lawsuits that may destroy people and businesses for infractions that may be little more than a foot fault, or perhaps an action is eventually tossed out by the courts – after the damage has been done.
We are now hearing from Reuters that the SEC may pump the breaks a bit on enforcement actions as decisions may no longer be made by staff, but the Commission will have the final say on pursuing allegations leveled by the SEC enforcement division. The report claims that lawyers will need permission from the Commission before they “formerly launch probes,” a move that will “slow down investigations.”
As the Commission is currently made up of 5 Commissioners, three Republicans and two Democrats, the decision-making process should be more business and innovation-friendly in contrast to the last Commission, which aggressively pursued actions – sometimes minus fraudulent intent. Fraudsters will always be pursued but we could see less egregious or nebulous actions take a back seat to more grievous crime. The report said the SEC and the White House did not comment on the chatter.