|  | | 2005 News and Press Releases | | |
HEADLINE NEWS:
Lawyers Play Key Role In Fraud Prevention, Panel Says
Phyllis Diamond
Securities Regulation & Law Report. December 5, 2005
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EXCERPT: A panel of senior Securities and Exchange Commission enforcement attorneys concurred Nov. 18 that, of directors, auditors, and other "gatekeepers," the corporate lawyer is often the person in the management suite best able to prevent a potential fraud from occurring. In a program at the American Bar Association annual Federal Regulation of Securities gathering in Washington, senior staff fielded a number of questions on avoiding liability, waiver of attorney-client privilege, and enforcement priorities, among other topics. Speaking generally, Enforcement Director Linda Thomsen lauded her division for "covering the waterfront" with respect to securities law enforcement. Citing what she called the "compliance" effect, Thomsen posited that people "behave better" if they think someone is watching. She analogized to the situation in which highway drivers slow down to avoid a perceived small-town speed trap. The perception that the commission is pursuing securities law violations of every variety has a similar deterrent effect, Thomsen suggested. "We can't be in all places at all times," she acknowledged. However, "if we get to all places some of the time, ... we will have a more effective [enforcement] program overall." Gatekeepers In the question and answer session, Associate Director Paul Berger responded to an inquiry about specific enforcement priorities, saying "God help you if you're involved in a Katrina-related scam." He said the enforcement staff is redoubling its efforts to address "retail fraud," such as "pump and dump" schemes and fraud in over-the-counter securities. "We're going to look at annuities," he continued, an area in which elderly investors are especially vulnerable to improper brokerage practices. Other focus areas include Section 529 college savings plans, hedge funds, so-called PIPE transactions, and "computer intrusions"--breaking into someone's brokerage account, for example. |
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