U.S. Chamber Drafting Report On SEC's Enforcement Process

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By Yin Wilczek

March 3 — The U.S. Chamber of Commerce is drafting a study on the Securities and Exchange Commission's enforcement process that will help companies navigate SEC investigations, representatives said March 3.

The report will be helpful to companies and their boards in understanding how SEC investigations should be handled, as well as help the enforcement staff understand what they should communicate to organizations about the nature of their investigations, said David Hirschmann, president and chief executive officer of the Chamber's Center for Capital Markets Competitiveness (CCMC).

CCMC Vice President Tom Quaadman said the report will be released later this year, “probably in the spring.”

The Chamber officials spoke at a telephone conference with reporters to announce the release of the organization's annual “Fix. Add. Replace. (FAR) Agenda.”

No `Rulebook.'

Hirschmann told reporters that the impetus behind the SEC enforcement study came from complaints by some corporate representatives that there is no “rulebook” for how companies should behave when they are being investigated by the SEC, including what they should tell their boards or shareholders.

“There needs to be a rulebook here that will make it easier for all” the parties, he said. “Ultimately, we think” the study “will both strengthen and make enforcement more effective, and make the process better for all.”

In preparing the report, the Chamber interviewed more than 200 people in the business community and more than 100 others who worked on SEC enforcement matters, both within and outside the agency, Hirschmann said.

The Chamber representatives declined to provide further details, saying they still are collecting data and finalizing the recommendations for the report.

One problem that such a study faces is the range and scope of SEC investigations, suggested David Kornblau, a partner at Covington & Burling LLP in New York.

The report should take into account the diversity of SEC investigations, Kornblau told Bloomberg BNA. “All SEC investigations are not created equal.”

To contact the reporter on this story: Yin Wilczek in Washington at ywilczek@bna.com

To contact the editor responsible for this story: Kristyn Hyland at khyland@bna.com

The Chamber's FAR Agenda is available at http://www.centerforcapitalmarkets.com/wp-content/uploads/2013/08/CCMC-2015-FAR-Agenda.pdf.