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This week SEC Enforcement continued to implement its new cooperation initiatives, moving forward from the spectacle of the Stanford testimony last week and the past. The Commission executed its first deferred prosecution agreement. The fact that it resolved an FCPA case, an area in which the agency has stood in DOJ's shadow in recent years, may suggest a new approach in this key enforcement area. The agency also filed a settled insider trading case, resolved a financial fraud action and brought more investment fund fraud cases.
DOJ obtained guilty pleas in two cases this week. One concluded an insider trading case. The other was the fifth in an FCPA investigation.
Market ReformCredit rating agencies: Implementing sections of Dodd-Frank, the Commission issued proposed rules regarding credit ratings and the operations of Nationally Recognized Statistical Rating Organizations. The proposals include provisions which would require reports on internal controls, protect against conflicts of interest and require that professional standards be established for credit analysts. They also require disclosure of the methodology used to determine rulings and that would enhance the disclosures about the performance of the ratings (here).
Testimony: SEC Enforcement Director Robert Khuzami and FINRA Chairman & CEO, Rick Ketchum testified before the House Subcommittee on Oversight and Investigations regarding the response of their respective agencies for failing to detect earlier the alleged Stanford Ponzi scheme. Mr. Khuzami's remarks are here and those of Mr. Ketchum here.
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For more cutting edge commentary on developing securities issues, visit SEC Actions, a blog by Thomas Gorman.
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