The Day After Securities Enforcement Forum 2023

”Partners of Honest Business and Prosecutors of Dishonesty”: SEC Chair Gary Gensler’s Remarks Before the 2023 Securities Enforcement Forum

In fiscal year 2023, our staff once again “[did] not weary of the fight.”

We filed more than 780 actions, including more than 500 standalone cases. We obtained judgments and orders totaling $5 billion. Our work led to $930 million distributed to harmed investors.

These numbers, though, tell only part of the story. Our philosophy behind them tells a fuller one.

Again, I think of our enforcement program through five themes: Economic Realities, Accountability, High-Impact Cases, Process, and Positions of Trust.

SEC Enforcement Chief: Pending Supreme Court Case on In-House Proceedings Will Not Pause Charges Against Accountants

The Securities and Exchange Commission (SEC) will not hesitate to file charges against accountants and auditors in district courts instead of using in-house administrative proceedings, said the agency’s Enforcement Director Gurbir Grewal at a conference on Oct. 25, 2023.

This comes as the commission is locked in a battle in a Supreme Court case—SEC v. Jarkesy—about the constitutionality of the SEC’s use of in-house judges. Arguments are set for Nov. 29. Critics of the SEC believe that the administrative enforcement program is unfair. By contrast, federal courts afford greater protections to defendants.

“We are not going to just stop holding auditors and other gatekeepers responsible when they fall short of their professional obligations just because there is some uncertainty in the court,” said Grewal at Securities Enforcement Forum hosted by Securities Docket in Washington. He spoke via a livestream.

US SEC Will Go to Court if Someone Is ‘Playing Games’ During Probes -Official

A top U.S. Securities and Exchange Commission official on Wednesday said the SEC will turn to courts to enforce its subpoena authority when someone is “playing games” or trying to delay investigations.

The SEC’s enforcement director Gurbir Grewal said the agency rarely turns to a court to enforce its subpoena authority, but will do so when necessary. Grewal estimated the agency pursued about a dozen such actions last year.

Earlier this month, the regulator sued Elon Musk to compel him to testify as part of a probe into his $44 billion takeover of social media giant Twitter.

We need to have accountability and we need to get that message out to the public,” Grewal said at an industry conference.

‘All Cases Are Important,’ SEC’s Gensler Says

Speaking at the Securities Enforcement Forum in Washington, Gensler stated that the SEC looks at “high-impact cases.”

“When you’re a victim of fraud, misconduct, and abuse, the highest-impact case is the one that affects you — whether you lost $20,000 due to affinity fraud or your life savings in a crypto-related scam,” Gensler said.

He told the audience of securities attorneys to work with their “clients to create a culture of proactive compliance.”

***

Gurbir Grewal, director of the SEC’s Division of Enforcement, said in separate comments Wednesday at the Securities Enforcement Forum that in each of the recent actions brought related to off-channel communications, “the firms at issue had the right policies and procedures but they didn’t have the implementation and execution” of those policies and procedures.

SEC’s Gensler Won’t Say What’s Next With Bitcoin ETFs After Grayscale Loss

The chairman came to the event to make a speech about SEC enforcement, and those remarks were heavily threaded with criticisms of the crypto industry that he said — in a frequently repeated phrase — is “rife with non-compliance.” When it came time to take questions, the moderator began with that topic, to which Gensler addressed how much crypto has become a consuming subject despite its relative scale.

“We have a $110 trillion capital market,” he said. “Crypto worldwide might be a trillion, but in the U.S. is less. So just by that, it’s well less than one percent of U.S. capital markets.”

SEC’s Gensler stays true to form, uses Wednesday speech to say crypto is full of ‘fraud, scams, bankruptcies and money laundering’

The crypto industry has experienced turmoil, especially over the past year amid the collapses of crypto exchange FTX, crypto hedge fund Three Arrows Capital and the algorithmic stablecoin Terra USD.

Gensler called the industry’s problems “not surprising.”

“This is a field rife with fraud, scams, bankruptcies, and money laundering,” Gensler said. “While many entities in this space claim they operate beyond the reach of regulations issued before Satoshi Nakamoto’s famous white paper, they also are quick to seek the protections of the law, in bankruptcy court and litigating their private disputes.”

Gensler also spoke in general about charges the SEC has brought against others, including a case involving the former CEO of McDonald’s.

“And don’t get me started on crypto,” Gensler said. “I won’t even name all the individuals we’ve charged in this highly noncompliant field.”