SEC names 6 to head new investigative units
Washington — The Securities and Exchange Commission named six people Wednesday to lead new investigative units as the agency reorganizes its enforcement efforts.
The SEC was scorched by its failure to detect the stunning, long-running fraud by money manager Bernard Madoff despite numerous red flags and credible warnings.
The new units and their leaders are: asset management, headed by Bruce Karpati and Robert Kaplan; market abuse, led by Daniel Hawke; structured and new products, Kenneth Lench; foreign corrupt practices, Cheryl Scarboro; and municipal securities and public pensions, Elaine Greenberg.
SEC Enforcement Director Robert Khuzami also announced new measures designed to encourage companies and individuals to cooperate more closely in providing information.
The SEC also set up a new Office of Market Intelligence to analyze the hundreds of thousands of tips and complaints received by the agency each year. It will be headed by Thomas Sporkin, who has been deputy chief of the SEC’s Office of Internet Enforcement since 2001.
The SEC inspector general recommended late last year that the agency create a new system for handling tips and complaints to prevent another breakdown like the one that allowed Madoff’s massive Ponzi scheme to flourish for nearly two decades.
For the first time, the SEC will have a formal framework of incentives for gaining the cooperation of people who witnessed instances of securities fraud -- and “who can walk into a courtroom, raise their right hand and tell their story to the world,†Khuzami said at a news conference.
The same types of cooperation incentives have been used by the Justice Department in its criminal investigations but haven’t been available to the SEC enforcement attorneys pursuing civil cases, Khuzami said.
They include formal written cooperation agreements under which SEC attorneys recommend leniency for parties providing information in their proposals to the SEC commissioners, who must approve enforcement actions.
Also, the SEC will defer prosecution against cooperating companies or individuals in some circumstances.
“Our new cooperation program has the potential to be a game changer for the enforcement division,†Khuzami said.
Gordon writes for the Associated Press.
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