Welcome back to the Compliance in Context Podcast! On today’s show, we feature a Lessons From The Front Lines episode where we will be providing a comprehensive, deep-dive look at the 2024 SEC Enforcement numbers published at the end of last year—including what was behind some of the eye-popping numbers, distinct areas of focus, and what firms can expect next under a Paul Atkins-led SEC. To help guide us through this important topic and share some fantastic insights for our listeners, we welcome a fantastic panel of experts, Brian Rubin from Eversheds Sutherland and Jim Lundy from Foley and Lardner.
Show
Interview with Brian Rubin and Jim Lundy
Quotes
11:22 - “Speaking of past data not being indicative of future results. In fiscal year ‘24, the commission brought cases against more than 70 firms, resulting in $600 million more in additional penalties, for those of us who’ve been living through this for the past several years. There’s no surprise that prior to January 2025, that leads to some pretty big numbers. And in the release, enforcement touted that since December of 2021, the initiatives in this space have resulted in changes against more than 100 firms and civil penalties in excess of $2 billion. As Brian mentioned, enforcement continued to be busy after the election through its first fiscal quarter for this fiscal year. And recently announced on January 13th, 12 more actions brought against nine investment advisors and three broker-dealers for off-platform books and records, record-keeping violations, and an additional $63.1 million in total penalties brought against those 12 firms” - Jim
23:17 - “We have a list of a few things that may happen. So, one of them is that there’s probably going to be a push to reduce the time that it takes to investigate cases. Everybody on the defense side and on the enforcement side thinks it takes too long and there’s a variety of reasons that it does take a while. One idea is a simple idea to just simply shorten the time period that investigations have. And although President Trump said he did not read Project 2025, which was a huge sort of white paper on things the new administration could do, one of the recommendations it contained called for statutorily limiting the time for investigations to two years.” - Brian
32:25 - “My personal view, I’m sure Brian would agree, but testimony sessions are one of the most important aspects of the investigated process for all involved: for the staff, for defense counsel, and (while it can be uncomfortable) for most importantly, the witness. When I went into private practice in 2016, I represented a CEO of a firm. They wanted him for three days. We ended up doing two and a half. It was the other end of the extreme. It was too much. But really, that testimony and most transcripts became incredibly important (in the Wells process that Brian was just talking about) and allowed us to get a really positive result for the client. And I don’t know if we would be afforded that level of interaction in an in-person testimony session today because it’s really the pendulum, I think, flowing too far in the other direction. And what you started to see is brief virtual sessions, with all due respect to the staff, becoming a little too cavalier. A little sloppy. Exhibits are cumbersome to use. Less exhibits were being used. And some of it’s not surprising. It’s just, it’s human nature.” - Jim
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