K. Winer and B. Clarkson, Update on SEC Enforcement: 2009 -- The Great Upheaval
Mary Schapiro, Chairman of the SEC, and Robert Khuzami, Director of the SEC Enforcement Division, have taken a number of steps to revamp the SEC's enforcement division. In this Analysis, Kenneth Winer, author of Securities Enforcement: Counseling and Defense, and Brooke D. Clarkson describe some of the key steps taken under Schapiro and Khuzami’s leadership and discuss the implications for corporate and defense counsel. They write:
IV. Hundred Day Speech
On August 5, 2009, Robert Khuzami gave an important speech to the Association of the Bar of the City of New York in which he discussed his first 100 days as Director of the Division of Enforcement and his plans for addressing the challenges currently facing the SEC. Robert Khuzami began his speech by comparing the period from late January 2009 to the present to roughly the same period in 2008 and highlighting the Division of Enforcement's improved statistics: the Division of Enforcement has opened 10% more investigations (approximately 525, compared to 475); has been granted 118% more formal orders (275, compared to 126); has filed 147% more TROs (52, compared to 21); and has filed nearly 30% more actions (397, compared to 306). He continued by articulating the four guiding principles and the five new initiatives that would enable the Division of Enforcement to continue to improve.
A. Guiding Principles
Robert Khuzami stated that under his leadership the Division of Enforcement will embrace four principles which he referred to as the four "S's":
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B. Initiatives
Also under his leadership the Division of Enforcement will implement five new initiatives: (1) creating specialized units; (2) streamlining management and internal processes; (3) creating an Office of Market Intelligence; (4) fostering cooperation by individuals in investigations; and (5) strategically using the Division of Enforcement's resources by building up the Trial Unit.
1. Specialized Units
Robert Khuzami announced the creation of five national units dedicated to particular areas of securities law. The goal of these specialized units is to provide the structure and resources to "get smart" about highly complex areas of securities laws. Each specialized unit will be headed by a Unit Chief, and will be staffed by individuals in the Division of Enforcement who have expertise in these particular areas or have a desire to learn. The specialized units will also be staffed by individuals with practical market experience and other expertise, whether from the private or public sector, including other SEC Divisions. Each specialized unit will receive advanced training.