The three fundamental problems with SEC enforcement are that the Commission and the Division of Enforcement (1) advance legal theories that are outside settled boundaries, (2) misunderstand or mischaracterize the factual record, and (3) fail to accord fair and impartial treatment to persons being investigated. The result is an unacceptably high number of cases that lack merit, meaning either that the extensive evidence collected by the SEC does not support the alleged violation or that the case relies on a legal theory that is not likely to be accepted by a court.
The SEC can do better and be more effective. It can extend more fairness and consideration to those being investigated without any damage to tough enforcement. The paper describes four ways to improve SEC enforcement
‘Enforcement 40’ for 2020
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