Senior Counsel Discusses New SEC Enforcement Initiatives

The Deal Pipeline

Securities litigation and regulatory enforcement senior counsel Jim Burns recently discussed three new enforcement initiatives announced by the Securities and Exchange Commission with the Deal Pipeline.

Burns stated that the formation of a task force may indicate that microcap stock fraud will be the next major area of focus for the SEC's enforcement division.

"If you look at this from a historical perspective, the SEC went after mutual funds on timing about 10 years ago. Then it was stock option backdating. There was 'say on pay,' and insider trading has kind of been on-going. And there was the Ponzi phase, with Madoff and Allen Stanford. But microcap fraud is an area that could present the SEC with new enforcement possibilities," Burns said.

He also stated that that the wider use quantitative tools may help the SEC with another regulatory issue.

"They ran into a problem earlier this year when the courts refused to move the statute of limitations of fraud beyond five years. That may sound like a long time to get a case done but for the SEC it can be a real issue," he said. ‚Äč