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SEC: Small Violations Can Lead to Strong Enforcement, Sanctions, and Fines

The Securities and Exchange Commission is turning to a new Enforcement strategy: zero in on minor infractions in order to stop large violations from occurring later on.

SEC Chairman Mary Jo White's speech last week put rogue advisors and brokers on notice: "Retail investors, in particular, need to be protected from unscrupulous advisers and brokers, whatever their size and the size of the violation that victimizes the investor."

White's message "sounds appealing," according to former FINRA and SEC enforcer Daniel Nathan, while former SEC deputy chief litigation counsel Stephen Crimmins concluded: "We will see great attention by the enforcement staff on bringing cases that were formerly handled as regulatory matters."

For investors, this could signal easier pursuit of misconduct not overtly attached to the buzzword "fraud" as the SEC cracks down on lesser-seen and less apparent instances of misconduct that harms customers.

For instance, while FINRA has historically penalized significant violations of suitability and unsuitable recommendations, White's comments suggest the SEC may investigate smaller complaints of wrongdoing more thoroughly.

Added Crimmins, "For people in this industry, it's a further wake-up call that the new leadership of the SEC is very committed to enforcement in the asset management space."

Both the SEC and FINRA carry sets of rules, regulations and expectations for registered brokers, advisers and other financial professionals and their firms, violations of which can prove costly to customers.

If you have invested with a broker, advisor or firm whose violation of FINRA/NASD/SEC rules—from failure to supervise, lack of adequate due diligence or disclosure violations such as omissions of material fact to conflicts of interest posed by improper outside business activities or excessive fees or mark-up/downs—has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.

News: SEC: Small violations can spur enforcement (InvestmentNews)

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