Laughing Out Loud At Certain Portions Of SEC Chair Gensler’s Speech
Yesterday, SEC Chair Gary Gensler delivered this speech.
I literally laughed out loud as to certain portions of Gensler’s speech.
I didn’t laugh because what Gensler said was unreasonable. To the contrary, much of what he said represents sound policy. Rather, I laughed because I have closely followed SEC enforcement practices (and speeches from enforcement agency officials) for over a decade.
Gensler began his speech as follows:
SEC Commissioner Peirce On The Recent Credit Suisse Resolution …
These pages have frequency covered SEC Commissioner Hester Peirce – both in terms of her spot-on speeches or statements (see here, here, and here for example) and her tendency to object to various aspects of SEC FCPA enforcement actions (see here).
As highlighted here, Credit Suisse recently resolved a $99 million FCPA (and related) enforcement action concerning financing of various Mozambican maritime projects as well as a related DOJ action (see here).
True to form, Commissioner Peirce made her voice known and issued this statement which reads in full:
SEC Director Of Enforcement Grewal On ….
SEC Director of Enforcement Gurbir Grewal recently delivered this speech to a securities industry audience.
While the Foreign Corrupt Practices Act was not specifically mentioned, the topics Grewal discussed (corporate responsibility, gatekeeper accountability, and remedies) are FCPA relevant.
Regarding corporate responsibility, Grewal stated:
The Current Time Gap In SEC Individual FCPA Enforcement Is The Longest In Eight Years
One reason to take FCPA enforcement agency rhetoric with a grain of salt is because it is warranted.
For instance, the FCPA enforcement agencies often talk about the importance of x and how they are committed to x, but in reality rarely do x.
Case in point is SEC individual FCPA enforcement actions.
For many years, SEC enforcement officials have talked about the importance of individual FCPA enforcement actions and set forth below are representative quotes from over the years.
SEC Commissioner Crenshaw Uncomfortable With Limiting Civil Penalties To Corporate Benefits
As highlighted in this prior post, earlier this year SEC Commissioner Caroline Crenshaw (appointed by President Trump and sworn into office in August 2020) stated that the SEC’s historical practice of placing emphasis on factors beyond the actual misconduct when imposing corporate penalties is “fundamentally flawed.”
In pertinent part, Crenshaw stated: “Over the years, Commissioners on both sides of the political aisle have agreed that a strong enforcement program incentivizes compliance with the securities laws, and that enforcement helps to promote a market that inspires investor confidence, creating a level playing field for market participants. But Commissioners have had different views about when corporate penalties further those goals. It is clear to me that the Commission has historically placed too much emphasis on factors beyond the actual misconduct when imposing corporate penalties – including whether the corporation’s shareholders benefited from the misconduct, or whether they will be harmed by the assessment of a penalty. This approach is fundamentally flawed. This approach, more concerningly, could allow companies to profit from fraud as it unnecessarily limits the Commission’s ability to craft appropriately tailored penalties that more effectively deter misconduct. If we are going to confront the novel issues today’s markets present and deter ever more complicated and hard to detect frauds, we must revisit our approach.”
In this recent public statement, Commissioner Crenshaw returned to the topic in connection with the recent Kraft Heinz Company enforcement action (see here for the prior post).