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Financial Services Law Insights and Observations

SEC Division of Enforcement says firms should take proactive compliance measures

Securities SEC Enforcement Compliance Agency Rule-Making & Guidance


On October 6, the SEC Director of the Division of Enforcement, Gurbir Grewal, discussed the agency’s mission to maintain market integrity and improve public confidence in the securities market. While Grewal noted that enforcement actions taken over the past few years have helped to significantly animate the idea that the SEC “will pursue potential violations by any market participant,” he stressed the need for joint coordination to promote better conduct among market participants. According to Grewal, this includes firms examining ways their specific business models and products interact with both emerging risks and enforcement priorities and tailoring compliance practices and policies accordingly. He stressed that market participants should take “proactive” compliance measures, including enhancing recordkeeping requirements, and anticipate emerging challenges instead of waiting for an enforcement action to implement the appropriate policies and procedures. Grewal also discussed the key role market participants play in identifying and addressing emerging risks. This could include ensuring proactive compliance efforts continue even after violative conduct has occurred, cooperating with SEC investigations, and voluntarily self-reporting potential violations “before the violation is about to be publicly announced." Grewal also noted that the SEC is currently evaluating its approach to enforcement action penalties to better assess whether past penalties have sufficiently deterred misconduct. 

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