Enforcement is 'back' at SEC.

• Author: Heffes, Ellen M.
• Position: REGULATION - Securities and Exchange Commission

At "SEC Speaks 2009," a conference hosted by the U.S. Securities and Exchange Commission Feb. 6-7, newly appointed Chairwoman Mary Schapiro announced the commission's intention to increase its efforts to detect, prevent and prosecute securities fraud. The message: Enforcement is back.

Two changes in particular highlight the SEC's renewed commitment to enforcement:

* First, Schapiro announced the commission's decision to end the "penalty pilot" program, which had required enforcement attorneys to get approval from the SEC commissioners before negotiating civil monetary penalties with public companies as punishment for securities fraud.

"At a time when the SEC needs to be deterring corporate wrongdoing, the 'penalty pilot' sends the wrong message,'' Schapiro explained. "The action I am taking to end the penalty pilot is designed to expedite the commission's enforcement efforts to ensure that justice is swiftly served to those public companies who commit serious acts of securities fraud."

What this means for public companies is that SEC enforcement attorneys will have the power to seek more penalties, more quickly, and in larger amounts than before.

* The second major change Schapiro announced was more rapid authorization for SEC staff to issue subpoenas to compel witness testimony and the production of documents. Schapiro explained that the procedure had become cumbersome, requiring the approval of all five commissioners at a periodic meeting to commence an investigation.

"To ensure that subpoena power is available to SEC staff when needed," she said, "I've given direction for the agency to return to the prior policy of timely approval of formal...