SEC’s White Warns: ‘Serious Mistake’ to Weaken Securities Rules

White addressed frustrations that senior executives and officers are often not held responsible for misconduct, saying the SEC has made strides in this area amid evidentiary challenges. The "fingerprints" of corporate officials might not be found directly on the conduct, White said, noting the high burden to hold an individual criminally liable.

U.S. regulators, White said, must "think outside the box of our current laws" to find ways to hold more senior executives responsible. She pointed to a potential example of a solution in the United Kingdom, called the "Senior Management Regime," a set of regulations that went into effect in March that make it easier for executives to be held accountable for misconduct at their firms if they don't take reasonable steps to prevent such misdeeds.

White also expressed hope Congress will give the SEC authority to bring higher penalties. "Although I often wish it were otherwise, the SEC does not have the authority to send anyone to jail," she said. She said she misses that power, which she used to have as a federal prosecutor and U.S. attorney.

On the civil side, White said she supports allowing the commission to seek penalties that are based on either three times the defendants' ill-gotten gains or the amount of investor losses—whichever is higher.

Pending legislation in Congress, the Financial Choice Act, allows SEC fines to be tripled, but also seeks to undo much of the Dodd-Frank Act. While supporting increased SEC penalty authority, White called the Dodd-Frank rollback part of the bill a "very worrisome broad-based proposal."

— Related on ThinkAdvisor:

• SEC Chief White to Step Down in January
• SEC's White: No SEC Fiduciary Rule Coming Before January