Evolutionary Enforcement at the Securities and Exchange Commission

Abstract:     
Since the worldwide financial meltdown in the autumn of 2008 and the discovery of Bernard Madoff’s crimes in December, 2008, hundreds of critics and political leaders have heaped abuse upon the SEC Enforcement Division. This article explores the SEC’s response to these critics, primarily through the appointment of new top-level managers and the initiation of an aggressive reorganization of the processes and workflow of the Division. It then sketches out six recommendations for further improving the Enforcement Division: a bounty program to compensate informants who come forward with useful information; creation of a victim services unit; a proposal to develop behavioral, as well as legal and financial, expertise within the Division; a surveillance and monitoring program for defendants demonstrating a recidivist profile; a sanction policy for individuals that is proportionate, progressive, remedial, and real; and regular publication of meaningful data regarding losses from fraud in the securities markets.

Number of Pages in PDF File: 30

Keywords: securities and exchange commission, enforcement, fraud, bounty, victim

Accepted Paper Series