In June 2018, the Committee on Capital Markets Regulation (the “Committee”) released a report, Rationalizing Enforcement in the U.S. Financial System (the “Enforcement Report”), which included nineteen recommendations for regulators to improve enforcement efforts for the U.S. financial system. The recommendations fell under four broad categories: (i) enhancing the structure of the U.S. enforcement system by improving coordination and procedural fairness, (ii) rationalizing sanction-setting, (iii) ensuring the appropriate use of monetary sanctions, and (iv) promoting individual accountability.
To enhance the structure of the U.S. enforcement system, the Committee recommended that agencies develop policies governing enforcement-related cooperation with other agencies, further efforts to avoid duplicative sanctions, and empower enforcement targets to remove enforcement proceedings from administrative tribunals to federal court in non-settled matters. To rationalize sanction-setting, the Committee recommended that agencies more carefully calibrate automatic disqualifications, release public penalty-setting principles, and develop centralized databases of enforcement actions to enhance transparency.
With respect to ensuring the appropriate use of monetary sanctions, the Committee recommended that agencies develop more thoughtful rules for the use of sanctions and increase transparency generally. With respect to promoting individual accountability, the Committee recommended that the DOJ and other authorities work to develop a centralized database of individual enforcement statistics and that an affirmative defense based on compliance and cooperation should be introduced with respect to enforcement actions.
The Committee has prepared a progress update noting specific regulatory developments that are relevant to the recommendations contained in the Enforcement Report. The Committee found that, although authorities have taken several discrete actions consistent with the Enforcement Report’s recommendations, considerable work remains to be done.
Read the Committee’s full progress report here.