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News October 18, 2004 Issue

OCIE’s Enforcement Referral Factors

Ever wonder how OCIE decides whether to refer examination findings over to the SECís Division of Enforcement?

Hereís some of the factors OCIE considers, as provided by director Lori Richards in an October 13 speech:

  • Does it appear that fraud has occurred?
  • Were investors harmed?
  • If the conduct does not include fraud, is it serious (i.e., ongoing, repetitive, systemic or severe?)
  • Did the firm apprise the SEC of the conduct and take meaningful corrective action? 
  • Is the conduct of a type or degree that is most appropriate for the SEC to handle, rather than another regulator?
  • Is the activity in a particular area that the SEC wants to emphasize (i.e. emerging types of wrongdoing?)
  • Did the actor profit from the conduct?
  • Did the actor appear to act intentionally?
  • Is the conduct recidivist in nature?
  • Were the firm's supervisory procedures inadequate?