SEC Chief Endorses DOJ's White Collar Crime Strategy To Punish Repeat Offenders

The chairman of the Securities and Exchange Commission on Thursday endorsed the Department of Justice’s new strategy of investigating repeat offenders of corporate wrongdoing.

Speaking to the Securities Enforcement Forum, SEC chair Gary Gensler called the Justice Department's strategy “broadly consistent with my view of how to handle corporate offenders” in the financial sector.

Last week, Deputy Attorney General Lisa Monaco said she would begin considering past wrongdoing by corporations when deciding how to go about a new investigation, breaking the past precedent of only reviewing cases where facts were similar. She added that the Justice Department would only grant leniency if a corporation was forthcoming with information about any employee or executive involved in wrongdoing.

"Although we understand the costs that enforcement actions can place on shareholders and others, our responsibility is to incentivize responsible corporate citizenship, a culture of compliance and a sense of accountability," said Monaco in an address to the American Bar Association.

For his part, Gensler walked through his approach to enforcement and called on companies to play their part in addressing wrongdoing. He praised the work of the Justice Department and other partners, but made clear that his staff remains the "real cops on the beat" of any enforcement actions.

Gensler detailed what he wanted to see from companies to help them steer clear of wrongdoing while helping to root it out.

Gensler said he instructed SEC staff to cut back on time-consuming meetings about arguments over enforcement actions and encouraged companies to be straightforward in their dealings with the agency.

Gensler also urged the securities industry to do more than the "bare minimum" in responding to subpoenas or conducting their own "self-serving independent investigation" without the SEC. He noted that the goal is to help the SEC speed up its investigations and identify wrongdoing.

While his tone veered on scolding, the chairman made clear that the primary goal is to foster mutual cooperation in the fight against white-collar crime and to foster a more accountable corporate culture in the industry.

"You all have our own clients," said Gensler at the end of his remarks. "Working in a field such as finance that touches so many lives, though, you also have another responsibility: a responsibility to the public."

Since taking the helm at the SEC, Gensler has made a number of announcements aimed at reminding those that fall afoul of regulators that his agency still has teeth. Under his watch, the SEC has revived debate on a rule that would claw back executive pay for submitting misleading financials and new measures to toughen oversight over excessively risky behavior.