The SEC’s Enforcement Division is “fully operational” and has pursued violations at the same pace it did prior to the pandemic despite staff working remotely since mid-March, Stephanie Avakian, a co-director of the division, told a web audience last month.
From mid-March until mid-June, the SEC brought 130 enforcement actions, “roughly the same number” as it did in the same period in 2019, Avakian said during a June 18 webcast, entitled “Regulatory and Criminal Update,” organized by broker-dealer lobby group Sifma.
The regulator received around 6,500 tips, complaints, and referrals from mid-March until mid-June, which is a 45% year-on-year increase.
“We’ve managed to conduct virtually all the core elements of the enforcement program remotely,” Avakian said.
The SEC, which will issue an annual report with its inventory of enforcements after its fiscal year ends on September 30, will continue to work remotely until at least October.
Scroll down for a slideshow on the pros and cons of testifying remotely before SEC investigators.
Pandemic-related concerns have swayed the Enforcement Division’s attention and that may bring some breathing room for financial advisors, according to according to Amy Greer, a lawyer and co-chair of Baker McKenzie’s North American Financial Regulation and Enforcement Practice, and former chief litigation counsel for the SEC’s Philadelphia regional office.
The takeaway from both the SEC and defense lawyers: Expect more enforcement actions.
“Clearly, new stuff is coming through,” Andrew Ceresney, a law partner in and co-chair of the litigation department at Debevoise & Plimpton, who previously served as SEC director of enforcement, said while speaking on the same Sifma webcast as Avakian.
The Pros and Cons of Testifying Remotely Before SEC Investigators
Pro: Ease of Arranging “The [SEC] staff has done a really good job sort of figuring out how to [handle remote testimonies], how to deal with the challenges … that are inherent in showing documents remotely and things like that. And frankly, the defense bar has done a nice job working with us in figuring out … how to get that done.” Stephanie Avakian, co-director, SEC Enforcement Division Source: June 18 Sifma webcast
Con: Trims Defense Lawyers' Tactical Moves The issues include an individual or entity’s ability to be properly represented and evaluate documents. They also include a lawyer’s ability to represent clients when they are not in the same room as their lawyers and when the SEC staff is in yet another room. Amy Greer, partner and co-chair of the North American financial regulation and enforcement practice at the Baker McKenzie law firm. Greer is also a former chief litigation counsel at the SEC’s Philadelphia Regional Office. Source: Interview :
Pro: Witnesses See More SEC Evidence Before Testifying "One of the things that has happened is the SEC staff typically provide you with the documents in advance so that the witness can have a hard copy of the documents.” Andrew Ceresney, a partner and co-chair of the litigation department at the Debevoise & Plimpton law firm. Ceresney is also a former director of the SEC’s Enforcement Division. Source: June 18 Sifma webcast
Con: Flurry of Pre-Meeting Issues Arise “From the defense perspective, it really is a matter of facts and circumstances and the situation. You have to look at: Who's the witness? What kind of exposure do they have? What's the [SEC] staff like on this matter? What's the witness like on this matter? Is it really important for me to be sitting next to the witness? Do I have concerns about being able to be in person to calm the witness down?” Andrew Ceresney, a partner and co-chair of the litigation department at the Debevoise & Plimpton law firm. Ceresney is also a former director of the SEC’s Enforcement Division. Source: June 18 Sifma webcast
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