SEC faces more senior staff departures

The SEC has announced a series of senior staff departures, with top enforcement, corporate and risk analysis officials heading for the door.

The agency said on December 8 that enforcement director and former prosecutor Andrew Ceresney will leave the agency by the end of the year after almost four years as head of the SEC’s largest division. Following his departure, Stephanie Avakian, deputy director of the enforcement division, will become acting director.

During Ceresney’s tenure, the commission filed more than 2,850 enforcement actions and obtained judgments and orders totaling more than $13.8 billion in sanctions. The SEC also charged more than 3,300 companies and more than 2,700 individuals, including many CEOs, CFOs and other senior corporate officers, officials write in an announcement.

Under Ceresney’s leadership, the enforcement division took actions including:

• Implementing a new settlement protocol requiring defendants in some cases to admit wrongdoing. The commission has so far obtained admissions from roughly 80 parties
• Greatly increasing its use of data and data analytics to detect and investigate misconduct. Among other things, the Center for Risk and Quantitative Analytics, created in July 2013, has over the last two years provided data analysis for more than 100 cases
• Refocusing its enforcement efforts on financial reporting matters
• Filing cases against firms operating alternative trading systems
• Filing more than 150 actions related to insider and abusive trading.

‘Under Andrew’s strong leadership, the enforcement division took its already robust enforcement program to an even higher level, achieving unprecedented results, including a record number of enforcement actions, first-of-their-kind cases and a first ever admissions policy for a civil law enforcement agency,’ says SEC chair Mary Jo White in a statement.

‘I am immensely proud of what we have accomplished together – our innovative and wide-ranging actions have protected investors, deterred misconduct and sent the message that the SEC is and always must be the tough cop on the financial beat,’ Ceresney says.

Two days before it emerged that Ceresney is leaving, the SEC said Keith Higgins, director of the division of corporation finance, also plans to leave the agency in the New Year. Since joining in June 2013, Higgins has led the division’s implementation of significant rulemaking and other responsibilities under the Dodd-Frank Act, the Jobs Act and Fixing America’s Surface Transportation Act.

He also directed the division’s disclosure effectiveness project and led projects including:

• Issuing a concept release seeking public input on modernizing the business and financial disclosure requirements in Regulation SK
• Requesting comment on revisions to certain financial reporting and disclosure requirements under Regulation SX
• Proposing the modernization of property disclosures for mining registrants
• Proposing to eliminate redundant and outdated disclosure requirements
• Proposing to require hyperlinks to exhibits in filings.

‘Keith has brought tremendous energy and expertise to the division of corporation finance’s mission to protect investors and facilitate capital formation,’ White says. When Higgins leaves, Shelley Parratt, deputy director of the division, will become acting director.


DERA HEAD
On December 2, the SEC said chief economist and division of economic and risk analysis (Dera) director Mark Flannery will leave the agency by the end of the month. He will return to his position as a finance professor at the University of Florida Graduate School of Business Administration. Upon Flannery’s departure, Scott Bauguess, the SEC’s deputy chief economist and Dera deputy director, will become the acting chief economist and acting director of the division.

Flannery has been chief economist and Dera director since September 2014, leading a broad range of activities such as providing economic analysis to support SEC rulemaking and developing analytical tools to assist in risk assessment and enforcement activities.

‘Mark has provided invaluable insight and analysis on important rulemakings and he has been instrumental in leading the commission’s efforts in working with international regulators on the economics of financial stability,’ says White.

Traditionally, SEC chairs and a number of senior staffers have left the agency when there is a change in US administration. New presidents are able to nominate members of the commission, and president-elect Donald Trump will have three vacancies to fill. White this month confirmed she plans to step down at the end of President Barack Obama’s term. Two other seats on the five-person commission are already empty.

In November, chief accountant James Schnurr announced his retirement from the agency; Stephen Luparello, director of the division of trading and markets, said he would leave the agency by the first of the year; and Matthew Solomon, the chief litigation counsel for the enforcement division, said he would leave the agency in December.

Trump’s statements during and since the election campaign, as well as his picks for cabinet positions across a variety of areas, strongly suggest his administration will take an anti-regulation stance. Industry professionals expect the revamped SEC to be less inclined to impose new, tough rules and have expressed uncertainty about the extent to which existing rules will be rolled back.