Securities And Exchange Commission Enforcement Trends

At a recent Practicing Law Institute panel, several of the regulators, including the Director of the Division of Enforcement at the Securities and Exchange Commission (SEC), spoke about the general priorities and trends in the enforcement area.

Data analysis

One trend, while not a type of misconduct, but rather a method of detecting it, is the SEC's focus on 'big data'. The SEC and other regulators are making a practice of analysing data, including trade reporting and compliance engine (TRACE) data, which includes transactions in complex financial instruments, to identify patterns that would suggest potential misconduct.

The process involves a request by the SEC for the full trade blotters or, in the case of a clearing firm, several years of trading data. From there, the data is reviewed and analysed for patterns that may indicate activities such as insider trading, cherry picking, unsuitable mark-ups and unsuitable sales. In the first instance, if the SEC