- within Intellectual Property, International Law, Food, Drugs, Healthcare and Life Sciences topic(s)
SEC Commissioner Elad L. Roisman offered his views on SEC settlements and regulatory enforcement actions. He said that he assesses a case after considering the Enforcement Staff's recommendation and whether the recommendation is consistent with the SEC's mission.
At SEC Speaks 2020, Mr. Roisman cautioned against "regulation by enforcement," stating that "we [(i.e., the Commissioners)] should not use our enforcement powers to promulgate and set new legal standards." Mr. Roisman expressed concern that regulation by enforcement can undermine the rulemaking process in the Administrative Procedure Act, which provides for public comment, and also pointed to Section 21(a) of the Securities Exchange Act as an underused tool for when the Commission wants to offer its views on an action, but not sanction any party involved in the matter. He distinguished between the SEC's roles of enforcing compliance rules when presented with concrete problems, and of trying to dictate a company's culture, indicating that he supported the former and not the latter.
When considering market participants acting in "good faith" to comply with the rules, Mr. Roisman stated, "enforcement should be the last resort, not a first resort." He explained that the SEC has offices in place to improve registrant compliance and, therefore, the Commission should rely on these divisions more often. On corporate civil penalties, he said that whether there is a clear "corporate benefit" is a central factor in his decisionmaking. If the Department of Economic Risk and Analysis can quantify the corporate benefit, he said, then he typically approves the recommended penalty; when there is a lack of quantifiable corporate benefit, Mr. Roisman expressed a disinclination to issue a shareholder-funded penalty, but remarked that he always analyzes on a case-by-case basis with investor welfare as his "North Star."
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