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SEC Priorities Unveiled at SIFMA's 2023 C&L Annual Seminar

Introduction

The Securities Industry and Financial Markets Association (SIFMA) recently hosted its Compliance & Legal Annual Seminar for 2023 in San Diego. The event, a cornerstone for legal and compliance professionals in the securities and financial regulation sectors, was graced by Gurbir Grewal, the Director of the Division of Enforcement at the Securities and Exchange Commission (SEC). Grewal engaged in a dialogue with Joseph Seidel of SIFMA, shedding light on the SEC's enforcement strategies and priorities for the year.

Drawing on Past Experience

Grewal began by reflecting on his tenure as the Attorney General of New Jersey, emphasizing the lessons he learned about the necessity of fostering public trust and collaborating with other regulatory bodies. He stressed the importance of utilizing diverse resources and authorities, acknowledging that the SEC cannot be omnipresent. Grewal also highlighted his efforts to delegate more authority to SEC staff attorneys, thereby expediting the Wells process.

SEC's Enforcement Focus and Objectives

The conversation then shifted to the SEC's recent enforcement activities and its key focus areas for the year. Grewal outlined the following:

1. Robust and Proactive Enforcement: The SEC is intensifying its enforcement actions, particularly in areas like books-and-records regulations, abusive trading practices, and emerging risks such as cryptocurrencies and private funds.
2. Aggressive Remedies: Grewal discussed the SEC's record-breaking penalties in 2022, stating that these have recalibrated industry expectations. The SEC aims to utilize its full range of remedies, including injunctive relief, bars, and clawbacks.
3. Promoting Compliance Culture: Grewal reassured compliance officers that the SEC is not targeting them unfairly. He encouraged firms to go beyond having compliance policies "on paper" and to demonstrate actual compliance.
4. Digital Assets: Grewal expressed concerns about non-compliance in the digital assets industry and emphasized the need for traditional financial institutions to tread carefully in this space.
5. Reducing Investigation Delays: Grewal expressed dissatisfaction with the time lag between news reports of potential misconduct and enforcement actions. He mentioned efforts to streamline document requests and improve the behavior of counsel during investigations.
6. Leveraging Technology: Grewal revealed that the SEC is employing market analytics to scrutinize suspicious trading activities and earnings-per-share manipulation.

Final Thoughts

Grewal concluded by stating that the SEC aims to empower legal and compliance professionals. He advised them to engage actively with their businesses and to stay abreast of the SEC's publicly stated priorities.

For those with questions or concerns about these developments, please feel free to reach out to Lucosky Brookman LLP's White Collar Defense & Investigations and Securities Enforcement & Litigation groups.