Strong enforcement by the SEC is "absolutely critical" to market integrity, Mary Jo White said Tuesday at SIFMA's annual meeting in New York.
In a colloquy with Bloomberg Television's Peter Cook, the new chief of the SEC made it clear the agency would have zero tolerance for misconduct. "Any institution — large or small — can undermine investor confidence" with its actions, she said.
White waved away the suggestion that the SEC was "too soft" and had gotten too close to Wall Street. She said the agency had produced a good record in the financial crisis — before her arrival — overseeing the return of some $3 billion to harmed investors.
She acknowledged, however, that the agency has a credibility problem and that its program could be strengthened. She said it would require admissions of guilt in instances of serious harm to investors or egregious fraud, a policy shift she announced soon after taking the agency's helm in June.
At the same time, the SEC would continue its much-criticized "no admit no deny" policy in certain settlements as this can bring accountability and get money to investors quickly.
These actions are intended to send a message, White said. They have a deterrent effect, and they inform the public.
Asked whether the SEC had treated SAC Capital and its founder Steve Cohen fairly, White declined to discuss Cohen as his case remains open. But she asserted that SAC Capital had been treated fairly, and that the huge settlement was a good one.
White said the agency would continue to pursue high-profile malefactors, but would not ignore small violators to the extent resources allow. The idea of going after small fries harks back to the "broken window" deterrent approach to law enforcement during Rudolph Giuliani's mayoralty in New York. White noted, for example, the September enforcement action against 23 firms for short selling violations.
She also said the agency's testing of firms would continue unabated, as it was very effective in identifying internal problems early and helping firms correct deficiencies before they lead to something worse.
