WASHINGTON, D.C.—Benjamin Schiffrin, Better Markets’ Director of Securities Policy, issued the following statement in connection with Better Markets’ new Report, “The SEC Must Hold Individuals Accountable for Corporate Misconduct”:
“SEC Chair Paul Atkins recently reiterated his longstanding opposition to imposing civil money penalties on corporations in his first Congressional testimony as head of the agency. Chair Atkins’s views about corporate penalties garnered attention during his confirmation process and fueled predictions that the SEC will impose fewer corporate penalties under his leadership. Less attention has been given as to whether there will be a concomitant rise in enforcement actions against the individuals responsible for a corporation’s misconduct.
“Chair Atkins’s own views suggest that there should be. He has said that corporations do not act; individuals do. He has also said that, as a result, corporate penalties punish the wrong parties by harming the corporation’s shareholders and not the individual wrongdoers. And he has said that individual liability is more likely than corporate penalties to deter individual executives from committing fraud. These views suggest that if Chair Atkins’s SEC is going to reduce its use of corporate penalties it must also hold more individuals liable.
“As our new report shows, this would be a welcome change. The SEC has a well-earned reputation for not pursuing top executives at the largest corporations. This leaves the public with the impression that these individuals can get away with anything and that the rules that apply to everyday Americans do not apply to wealthy corporate executives.
“Chair Atkins has said repeatedly since becoming Chair that he believes it is a new day at the SEC. One way he can make it a new day at the SEC in a way that would better protect investors would be to bring cases against the individuals who commit corporate misconduct. He is right that such cases are more likely to deter such misconduct. So Chair Atkins’s own views suggest that if his SEC is going to impose fewer corporate penalties there also should be an increase in individual liability. Whether there will be remains to be seen.”
The report is available online here.
###
Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.
