On Friday of last week, Mary Schapiro announced with some degree of fanfare that to improve its enforcement efforts, the SEC was terminating a “pilot program” that required staff members to receive approval from the commissioners of the SEC before negotiating penalties. Yesterday, however, former SEC Commissioner Paul Atkins (pictured) stated that Schapiro is “wrong” in her assessment of the requirement.
Investment News reports that in remarks at yesterday’s U.S. Chamber of Commerce conference, Atkins stated that the “pilot program” was not really a pilot program at all, and is “actually the rules of the commission.” Atkins said that SEC rules adopted in the 1960s require the SEC staff to obtain approval from the Commission before they begin negotiating penalties with companies found guilty of violating securities rules.
According to Atkins, Schapiro is “completely incorrect” in implying that the program that she ended last week goes against SEC precedent, Investment News reports.
Former SEC Chairman Harvey Pitt also spoke at the conference, and reportedly stated that it was difficult for commissioners to reject penalties already negotiated by enforcement staff when he led the commission from 2001-03:
“The staff had latitude to begin negotiations for settlements” during the period he served as chairman, Mr. Pitt said. “This could produce difficult problems for the commissioners because it’s very hard to reject an offer of settlement,” even if commissioners did not believe a case warranted enforcement action, he said.
