Fines by top Wall Street cop down in Trump's 1st year

Wall Street's top regulator is punishing fewer companies and imposing smaller fines, bringing penalties and cases in the latest fiscal year to the lowest since 2013, according to new research.

Total penalties imposed by the Securities and Exchange Commission in the fiscal year ended September 30 fell 15.5 percent over the previous year to about $3.4 billion, the lowest level in four years, according to research conducted by Georgetown University law professor Urska Velikonja, to be published next year.

Within that total, the size of fines alone -- which does not do include the return of ill-gotten gains -- is down 40 percent, according to Velikonja's research, to be published next year. And the number of cases the agency has pursued has fallen nearly 18 percent, also the lowest level in four years.

Penalties are down because the SEC is not pursuing as many big fish, she told AFP on Tuesday. 

"Big firms are targeted less frequently and when they are, they pay smaller fines," she said. "If you narrow it down to enforcement against financial firms, there's virtually no enforcement."

And 53 percent of the fines imposed in the latest fiscal year came in the final four months of the Obama administration.

The SEC did not respond to an AFP request for comment. SEC officials have said this year they have no intention of reducing penalties, and they have cautioned against reading too much into a single year's numbers.

The situation is not helped by the fact the SEC for months was without a full slate of commissioners, causing a stalemate between its Republican and Democrat commissioners, since there was no tiebreaking vote. That left the agency unable to act in some cases.

- 'Fewer cases, smaller fines' -

President Donald Trump's administration has moved to slash regulation across the federal government which he has said will unleash economic growth. 

SEC Chairman Jay Clayton, a Trump appointee and long-time Wall Street lawyer who took office in May, has signaled a shift away from the agency's aggressive approach to law enforcement in the wake of the 2008 financial crisis, saying large corporate penalties very often harm innocent investors.

"Shareholders do bear those costs and we have to keep that in mind," Clayton said during Senate testimony earlier this year. 

Velikonja told AFP the change in SEC leadership may have caused a slowdown in cases, but does not explain falling penalties.

The agency also has curtailed investigators' ability to issue subpoenas quickly, and a hiring freeze has led to a sharp drop in staff levels at the agency's Enforcement Division, she said.

Since Clayton took over in May, the agency has pursued a $35 million settlement with the Boston asset management company State Street, in which the SEC tagged along with an existing Justice Department case, and a $97 million case against a subsidiary of the British bank Barclays.

In the same period last year, the SEC pursued cases against more than a dozen major firms, including Wall Street giants Merrill Lynch, Goldman Sachs and Citigroup as well as the private equity firm Apollo and the hedge fund Och-Ziff.

"I believe there's going to be fewer cases, lower fines," Velikonja said.

Source : AFP