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Commissioner Stein Advocates For Enforcement Against Gatekeepers

In her first speech as a commissioner at SEC Speaks, Commissioner Stein discussed the SEC’s enforcement efforts, noting that one of the biggest surprises during her time at the Commission was the vast scope of the agency’s enforcement program.  She advocated for individual accountability for gatekeepers including executives, compliance officers, accountants and attorneys.  Unlike SEC Chair Mary Jo White, Commissioner Stein did not include boards specifically in her description of gatekeepers.  Commissioner Stein stated that, particularly in an era where the SEC has fewer resources at its disposal, pursuing enforcement against gatekeepers is “both an efficient and effective approach to policing the securities marketplace.”  She explained that these “gatekeepers” should be empowered to “look for red flags, ask the tough questions, and demand answers” – and that they should be held accountable for failing to do so.  Commissioner Stein also praised enforcement actions against traders and execution venues to send a strong message about the importance of good systems and people.

Like the Commission’s enforcement efforts, Commissioner Stein also emphasized the importance of the agency’s rulemakings and specifically mentioned money market fund reform.  She noted that the Commission’s current work on rulemakings to prevent runs on money market funds may not be enough to address system risks in the financial system.  She advocated considering whether the regulation governing the role that money market funds play in the short-term funding markets needs to be updated.  Specifically, she questioned whether “enhanced capital, leverage, liquidity and margin rules would help mitigate risks at the firms, and in the markets, we regulate.”