All About Enforcement

It’s seems a daily occurrence now that the Securities and Exchange Commission levies an enforcement action against a financial services firm–a tell-tale sign that SEC Chairman Mary Schapiro is sticking to her pledge to beef up the agency’s enforcement division. A further sign of Schapiro sticking to her guns is the SEC enlisting in early March the services of the Center for Enterprise Modernization, a federally funded research and development center operated by The MITRE Corporation, to help it conduct comprehensive reviews of internal procedures the agency uses to evaluate tips, complaints, and referrals–no doubt a reaction to the SEC’s slipup invirtually ignoring tips about the Bernie Madoff Ponzi scheme.

Schapiro asked Congress March 11 to allow the SEC to use $17 million this year that went unspent by the agency in previous years so that the SEC could add more employees to its enforcement division. “We plan to add staff to the SEC’s Enforcement program to focus on pursuing tips, complaints, and other leads, thus increasing the resources the SEC can dedicate to frauds that citizens bring to our attention,” Schapiro told the Subcommittee on Financial Services and General Government Committee on Appropriations. Schapiro would use some of the money to expand its inspections of credit rating agencies, “and to strengthen risk-based surveillance and examination oversight of investment advisers.”