Blast From Ex-SEC Cop Shows Shift in SEC's Strategy
The Way It Was
When the former SEC attorney worked for the Commission, decisions about which cases to prosecute were driven by an assessment of which cases would give "the greatest bang for the buck." Prosecutorial "bang for the buck," he explained, was measured in two ways:
- Cases that have the most educational benefit to the investing public.
- Cases that have the greatest deterrent to would-be scam artists.
The ex-cop faulted Chairman Pitt's private meetings  because they "undercut the deterrent effects" of the law-enforcement program." He also faulted the SEC's investor summit  for allowing the Chairman to answer pre-selected questions, presumably lessening the educational benefit to the investors.
The Way It Is Now
The criticism doesn't seem to pack the same punch in today's world, however. According to the Wall Street Journal, the SEC is moving away from prosecuting civil charges toward encouraging the prosecution of criminal charges. The Journal quotes SEC Director of Enforcement Stephen Cutler as saying, "There’s nothing that speaks more loudly to all potential wrongdoers than the prospect of jail time." The SEC's civil penalties, with two-to-three year probes ending in fines and cease-and-desist orders, pale in comparison. According to the Journal, Chairman Pitt has instructed all SEC regional office directors and headquarters staff to meet with prosecutors to build interest in white-collar criminal cases. (SEC Welcomes Prosecutions, Wall Street Journal, June 11, 2002).