Recently, the Securities and Exchange Commission’s Enforcement Division released their annual report detailing its priorities for 2018. The department will be guided by 5 principles: Focus on the Main Street Investor, Focus on Individual Accountability, Keep Pace with Technological Change, Impose Sanctions that Most Effectively Further Enforcement Goals, and Constantly Assess the Allocation of Resources.
Principle 1: Focus on the Main Street Investor
The Commission recognizes that main street investors, commonly referred to as retail investors, are the most vulnerable in the marketplace. Retail investors are more susceptible to misconduct such as accounting fraud, sales of unsuitable products and the pursuit of unsuitable trading strategies, pump and dump fraud, and Ponzi schemes. To increase the protection of retail investors, the Commission has created a Retail Strategy Task Force. The Retail Strategy Task Force will develop strategies to address harm to retail investors.
Principle 2: Focus on Individual Accountability
In 2018, the Commission will focus heavily on individual accountability. It is the Commission’s belief that vigorously pursuing individuals for wrongdoing will deter future occurrences by the individual and others who may be watching. The Commission plans to send a message by severely punishing wrongdoers and stripping them of their ill-gotten gains.
Principle 3: Keep Pace with Technological Change
In today’s age, technology continues to advance and change the way we do things. There is no exception when it comes to the financial industry. The Commission recognizes that technology has dramatically impacted the markets. With today’s technology, individuals are able to engage in cyber-enabled misconduct. To address this issue, the Commission formed a specialized Cyber Unit to consolidate its substantial cyber-related experience. The focus on the Cyber Unit is to investigate and prosecute the increasing technologically-driven violations.
Principle 4: Impose Sanctions that Most Effectively Further Enforcement Goals
Just as the Commission will focus on individual accountability to deter wrongdoing, it will also focus on sanctions to drive behavior. There are several sanctions that the Commission mentions that it will consider to further its enforcement goals such as monetary relief in the form of disgorgement, penalties, asset freezes, barring wrongdoers, and admissions of wrongdoing.
Principle 5: Constantly Assess the Allocation of our Resources
In 2018, the Commission will focus on making sure it allocates its resources to the most significant market risks and in the most effective manner. It recognizes that its staff is limited in regards to the volume of suspicious activity reports filed and tips received.