Share This Page

SEC's most fearsome prosecutorial weapon lies in shame

| Saturday, Jan. 26, 2013, 4:58 p.m.

WASHINGTON — If the Senate confirms Mary Jo White as head of the Securities and Exchange Commission, she'll be missing a lot of the enforcement tools readily available to her during her near-decade as U.S. Attorney in Manhattan.

The threat of long-term prison sentences won't be an option because the SEC handles only civil cases. Wiretaps, search warrants, undercover operations and grand jury investigations are also out of the question.

In other words, without some help from the Justice Department, even a hot-shot prosecutor like White simply cannot deliver if the public wants to see Wall Street barons behind bars.

That doesn't mean that the agency lacks plenty of muscle to flex.

One of the most effective tools at the SEC's disposal is also one of the most basic: shame. The agency has the power to carry out an investigation and issue a tell-all story about an individual, even if it finds no violation, said James Cox, a professor of corporate and securities law at Duke University.

The goal of federal securities law is not necessarily retribution but deterrence. That's why the longest-standing remedy at the SEC's disposal has been injunctive relief, basically barring a person from engaging in a particular conduct.

Although those penalties are key, some securities experts say the SEC's power to bar individuals from serving as officers or directors of a public company can be far more damaging. Fines may not mean much to a person of wealth, but taking away a person's livelihood can be the ultimate punishment.

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.