Securities Exchange Commission (SEC) News and Developments: SEC Chair Names New Co-Directors for Enforcement Division

In further Securities Exchange Commission (SEC) news and developments, on June 8, 2017, Chairperson Jay Clayton announced he was appointing two Co-Directors for the SEC Enforcement Division. As we noted in an earlier post, SEC observers considered appointing the Director of the Enforcement Division as the first big decision Clayton would make. Securities practitioners, too, looked forward with anticipation to Clayton appointing the head of the Enforcement Division which is the largest division in the SEC. The co-director appointments in little more than a month after his own swearing-in indicate a strong commitment to enforcement by the new SEC Chairman.

Moving the Division from a Director to Co-Directors.  Practitioners can perhaps take comfort in the fact that the Enforcement Division will now have two co-directors instead of a single director. It's possible that the action signifies the SEC's acknowledgement of the depth and breadth of the current and future caseload.

·  Stephanie Avakian will transition from her role as Acting Director of Enforcement at SEC during the last three years (June 2014 - May 2017) to serve as Co-Director of the division. Ms. Avakian will remain in the Washington, DC office in her new role. Before coming to Washington, DC, Ms. Avakian worked in the New York Regional Office as a branch chief in SEC's Division of Enforcement. She later served former SEC Commissioner Paul Carey as his counselor. Ms. Avakian earned high honors in both her undergraduate work culminating in a bachelor's degree from the College of New Jersey and in her law studies at the Temple University School of Law.

·  Stephen Peikin will serve as Co-Director with Ms. Avakian. Mr. Peikin relinquishes his position as Managing Partner at Sullivan & Cromwell where he headed the Criminal Defense and Investigations Group. He brings a wealth of experience in the fields of white-collar defense, regulatory enforcement, and internal investigations. He also serves as an adjunct law professor at New York University's Law School where he teaches law students about criminal enforcement of securities and commodities. Mr. Peikin's background as a district attorney will serve him well in his new role at SEC. He served eight years as a former Assistant US Attorney in the Southern District Court of New York where he was the Chief of that office's Securities and Commodities Task Force. During his tenure there, he prosecuted high-profile criminal cases involving foreign exchange abuses, accounting fraud, insider trading, and stock market manipulation. Mr. Peikin earned magna cum laude honors for his bachelor's degree from Yale University and the law degree conferred upon him by Harvard University. Mr. Peikin will work between SEC's Washington DC Headquarters and the New York Regional Office.

In naming Ms. Avakian to her new post, Chairman Jay Clayton said that “She has a first-class legal mind, has the respect of her colleagues in the Washington and regional offices, and, most importantly, is dedicated to the SEC’s mission.”  In appointing Mr Peikin, Chairman Jay Clayton said that “Steve brings to the SEC deep market knowledge and extensive prosecutorial experience, including in multinational matters. I have no doubt that investors and our markets will benefit from his service.”

In his statement announcing the Enforcement Division appointments generally, Mr. Clayton pronounced that "There is no place for bad actors in our capital markets...Stephanie and Steve will aggressively police our capital markets and enforce our nation’s securities laws..."

SEC observers and practitioners will watch carefully to see whether the SEC's Enforcement Division's focus will refocus enforcement efforts against individual bad actors (see Clayton's statement) and away from fines imposed against corporations. Clayton had noted in his statement following his appointment as SEC Chairman that imposing fines against corporations (and not just against the bad actors) were really penalties against shareholders who paid the ultimate price.

VerifyInvestor.com users can help avoid enforcement actions by taking reasonable steps to verify that their investors are accredited investors as is required by law.