Skip to content

Enforcement Highlights

  • About Us
  • Contact
  • Cookie Policy
Enforcement
Highlights

Covering SEC, CFTC, FINRA, PCAOB, States, Exchanges, & FCA Enforcement Activities

SEC Announces Next Step in Pandemic Response Efforts, Forms Cross-Divisional COVID-19 Market Monitoring Group

As we noted earlier this month, the SEC has sought to proactively combat fraud related to the coronavirus/COVID-19 pandemic and related economic crisis by suspending the trading of at least eleven different companies since February 7, 2020. On Friday, April 24th the SEC announced another major step in its related efforts to protect investors — the formation of a Cross-Divisional COVID-19 Market Monitoring Group.

According to the SEC, the group is intended to assist the Commission and staff in analyzing “the effects of COVID-19 on markets, issuers and investors—including our Main Street investors” and to work with other regulators and public sector entities such as the President’s Working Group on Financial Markets, the Financial Stability Oversight Council, and the Financial Stability Board. This initiative is broadly linked to Chairman Clayton’s longstanding interest in supporting “the long-term interests of the Main Street investor.”

According to the SEC’s press release, the new group will be chaired by the SEC’s Chief Economist and Director of the Division of Economic and Risk Analysis, who will be assisted by the Chief Counsel and Senior Policy Advisor for Market and Activities-Based Risk in the Office of the Chairman. The group will also include Directors or Associate Directors from a broad swath of the SEC’s offices and divisions, including the Division of Investment Management, the Office of Compliance Inspections and Examinations, the Office of International Affairs, the Division of Corporate Finance, the Office of Credit Ratings, the Office of Municipal Securities, and the Division of Trading and Markets.

While it will be difficult to judge the efficacy of this cross-divisional working group, its formation seems to send the right message both inside and outside the SEC. In the past, the SEC has been criticized by some for being too siloed and not fostering sufficient cross-divisional collaboration. Indeed, the U.S. Government Accountability Office, who has been tasked with evaluating the SEC in connection with the Dodd-Frank Act, made those criticisms in their report in December 2016. The COVID-19 Market Monitoring Group is one of several working groups that has been created in the past few years to address major markets threats or emerging areas of the law. For example, the SEC has utilized the Distributed Ledger Technology Working Group and the Dark Web Working Group to leverage resources and expertise across the organization to address important issues that impact a variety of the SEC’s permanent divisions and offices.

Though the COVID-19 Market Monitoring Group is described in the SEC’s press release as “temporary,” it will be interesting to see if it persists beyond the anticipated economic recovery. Additionally, it will be interesting to see whether the working group takes on any public role in the agency’s communications with the public about COVID-19 related securities matters, and/or assisting in any of the enforcement actions that will inevitably continue to flow from the present circumstances. We will continue to closely monitor and analyze the SEC’s efforts to address the unique market conditions created by COVID-19.

Reporting companies should ensure that they update their risk factors and MD&A disclosures in light of COVID-19, and should consider engaging outside counsel if they are contacted by members of the Commission staff, particularly the staff of the Division of Enforcement.

Subscribe and Receive Alerts to New Articles

SUBSCRIBE
April 29, 2020
Written by: Michael MacPhail
Category: Compliance and Supervision, Hedge Funds and Private Equity, Insider and Manipulative Trading, Investment Advisers and Broker Dealers, Public Companies, Accounting, and Auditing
Tags: COVID-19, Monitoring

Post navigation

Previous Previous post: COVID-19: SEC Announces Trading Suspensions and Focuses on Potential Fraud
Next Next post: SEC Enforcement Expanding Efforts Regarding Coronavirus Impacts

Subscribe to Email Alerts

Categories

  • Compliance and Supervision
  • Futures and Derivatives
  • Hedge Funds and Private Equity
  • Insider and Manipulative Trading
  • Investment Advisers and Broker Dealers
  • Municipal Bond Offerings
  • Public Companies, Accounting, and Auditing

©2023 Faegre Drinker Biddle & Reath LLP. All Rights Reserved. Lawyer Advertising.

  • About Us
  • Contact
  • Cookie Policy
We use cookies to improve your experience with our website. By browsing our site, you are agreeing to the use of cookies. For more information about how we use cookies, please review our privacy policy and cookie policy. OK
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT