Strategy behind SEC increasing its enforcement sweeps (IGNITES)

The SEC’s Director of Enforcement, Gurbir Grewal, has publicly stated that firms should expect more sweeps with increasing frequency. The Enforcement Division’s plan seems to be backed up by the SEC’s record amount of fines collected during the past fiscal year, with prior sweeps a large contributor to that total. And now the SEC believes there is a need to push the pace of investigations even further given the volatility and uncertainty in the markets. In exclusive comments, Amy Lynch, FrontLine’s Founder and President, explains both the SEC’s strategy and how it needs to be mindful when assessing fines. Ms. Lynch states that while the mandate of the SEC is to protect the integrity of the markets, its fines cannot be overly burdensome to cause financial harm to firms. She further comments that the Enforcement sweep initiatives are meant to create a greater deterrent for wrongdoing and to incentivize proactive compliance to prevent violations from occurring. Ms. Lynch also states that sweeps are viewed as an effective regulatory practice when there is a particular trend of misconduct that is prevalent in the industry. See IGNITES (subscription required), “More Enforcement Sweeps to Come: SEC”