SEC to Focus on Individual FAs Next Year

The latest enforcement actions report from the SEC suggests the regulator will likely go after advisors more often than firms, legal experts tell InvestmentNews.

The SEC brought 82 standalone cases in fiscal year 2017 compared to 98 the year prior, but advisors shouldn’t get too comfy, according to the publication. Eighty percent of the actions were against individuals, Todd Cipperman, a managing principal at Cipperman Compliance Services, tells InvestmentNews.

“Just because you’re paranoid doesn’t mean they aren’t after you,” Cipperman tells the publication.

The SEC is likely to continue prioritizing individual advisors over firms even though it’s more expensive “because of the fear and the deterrent effect,” he says, according to InvestmentNews.

In January, SEC chair Jay Clayton said much the same, according to the publication. Going after individuals and naming names also produces “more of a reputational effect,” Amy Lynch, founder and president of FrontLine Compliance, tells InvestmentNews.

The SEC is shifting staff to its new cybersecurity unit and its new Retail Strategy Task Force, launched in September, but it is also reducing the number of lawyers in its enforcement division by 100 through attrition, Deborah Meshulam, a partner at the litigation firm DLA Piper and a former assistant chief litigation counsel of the division, tells the publication. The cut isn’t likely to affect its enforcement brawn, however, according to Meshulam: the SEC will likely simply go after bigger fish, she tells InvestmentNews.  MORE

Mark Brown