SEC Actions Resulted in Return of Over $3 Billion to Harmed Investors During Peikin’s Three-Year Term
Washington D.C., Aug. 5, 2020 —
The Securities and Exchange Commission today announced that Division of Enforcement Co-Director Steven Peikin will leave the agency on Aug. 14, 2020.
During his more than three years serving alongside Co-Director Stephanie Avakian, Mr. Peikin worked to better position the agency’s largest division to address emerging threats, increasing its efficiency and effectiveness in investigating and prosecuting violations of the federal securities laws.
Upon Mr. Peikin’s departure, Ms. Avakian will remain Director.
Under the Co-Directors’ leadership, the Enforcement Division redoubled its focus on the needs of retail investors and, at the same time, continued to police the broad landscape of the securities markets and vigorously pursue securities law violators. These efforts are reflected in the results: during the Co-Directors’ tenure, the Commission brought thousands of high-quality enforcement actions, obtained judgments and orders totaling over $13.5 billion in disgorgement and penalties, and returned more than $3.1 billion to harmed investors.
“Under the leadership of Steve Peikin and Stephanie Avakian, our Enforcement Division has increased its efficiency, flexibility, and impact.” said SEC Chairman Jay Clayton. “Their investor-first efforts have resulted in thousands of actions that have righted wrongs and, more importantly, both returned illicit gains to harmed investors and eliminated improper fees, providing lasting savings for years to come. Further, the efforts of the women and men in the Division to promptly address COVID-19 related misconduct demonstrate the flexibility, expertise and commitment to our mission that Steve and Stephanie’s leadership has fostered across the SEC.”
“Serving as Co-Director of the Division of Enforcement has been an incredible honor, and I am immensely grateful to Chairman Clayton for his confidence in me, for giving me the opportunity to again serve the public, and for his unwavering support of vigorous enforcement of the federal securities laws,” said Mr. Peikin. “I am tremendously proud of the accomplishments of the women and men of the Division of Enforcement, whose knowledge, expertise, and dedication to protecting investors and preserving market integrity inspired and impressed me every day. It has been a privilege to serve among them.”
“Steve has been a strong, unwavering leader for the Division,” said Stephanie Avakian, Co-Director of the Division of Enforcement. “By using his considerable expertise and impeccable judgment for the public good, he has been an example for all of us. He has been a terrific partner, and I will miss him.”
Mr. Peikin and Ms. Avakian have approached their roles guided by a single overarching ideal: prompt, vigorous enforcement of the federal securities laws is critical to combat wrongdoing, compensate harmed investors, and maintain confidence in the integrity and fairness of our markets. To achieve that ideal, in their first Annual Report of the Division of Enforcement, Mr. Peikin and Ms. Avakian identified five core principles that would guide the Division’s work under their leadership:
Focus on the Main Street Investor
Under the Co-Directors’ leadership, the Enforcement Division’s top priority has been the interests of long-term Main Street investors. Mr. Peikin and Ms. Avakian established several initiatives and devoted significant resources to protecting these market participants, who are often particularly vulnerable and deserving of the Commission’s attention. Among other notable highlights were the Commission’s Share Class Selection Disclosure Initiative, the creation of the Retail Strategy Task Force, the Teachers Initiative and Military Service Members Initiative, the detection and pursuit of large scale Ponzi schemes – including obtaining large scale recoveries of funds for victim investors – and significant efforts to combat microcap fraud.
Focus on Individual Accountability
A central pillar of Mr. Peikin and Ms. Avakian’s tenure has been holding individuals accountable for wrongdoing. Over 900 of the Commission’s standalone enforcement actions involved charges against one or more individuals. Those charged include many at the top of the corporate hierarchy, including chief executive officers, chief financial officers, and chief operating officers. The Commission continued its pursuit of gatekeepers such as accountants, auditors, and attorneys.
Keeping Pace With Technological Change
Recognizing that technology continues to transform not only our markets, but also the ability of wrongdoers to engage in misconduct, Mr. Peikin and Ms. Avakian adopted several new initiatives and processes to help the Division maintain the level of technological expertise necessary to protect investors from bad actors. In 2017, Mr. Peikin and Ms. Avakian established the Cyber Unit, a new, specialized unit, to spearhead the Division’s efforts to combat cyber-related threats and intrusions and to address violations involving digital assets and distributed ledger technology. The Cyber Unit led the Division’s significant efforts to combat fraud and misconduct involving ICOs, an emerging asset class that presented significant and novel risks to investors. The Division also pursued charges against public companies for failures to disclose cyber-intrusions, registrants for failing to safeguard customer information, and international hackers who invaded systems to steal inside information. Under Mr. Peikin’s and Ms. Avakian’s leadership, the Division significantly enhanced its ability to conduct sophisticated data analysis, including to detect insider trading, “cherry-picking” schemes, and the sale of unsuitable investment products or programs to retail investors.
Impose Sanctions That Most Effectively Further Enforcement Goals
Under Mr. Peikin and Ms. Avakian’s leadership, the Division focused on tailoring specific relief to best address the underlying charges. In addition to traditional monetary relief, the Division also sought non-monetary remedies, including over 1,600 bars and suspensions of wrongdoers, suspensions of trading in the securities of over 840 issuers – including dozens for COVID-19 related issues – more than 80 court-ordered asset freezes, and bespoke injunctions and undertakings tailored to underlying misconduct.
Constantly Assess the Allocation of Resources
To ensure the Division addresses the most significant market risks in the most effective manner, Mr. Peikin and Ms. Avakian continually assessed the allocation of the Division’s resources. Particularly, they focused on streamlining and improving processes in the Office of the Whistleblower, centralizing the Division’s efforts to distribute funds to victim investors, and increasing the speed and effectiveness of complex investigations of financial fraud and issuer disclosures.
In March 2020, Mr. Peikin and Ms. Avakian convened and led the Coronavirus Steering Committee, through which they coordinated the Enforcement Division’s response to the threats presented by the COVID-19 emergency, as well as the ensuing dynamic market conditions. As a result of these efforts, the Commission has to date suspended trading in the securities of dozens of issuers who made claims related to COVID-19 and has filed five COVID-19 related fraud charges. The Steering Committee is coordinating scores of investigations relating to a wide variety of potential misconduct.
Prior to joining the SEC in June 2017, Mr. Peikin was Managing Partner of Sullivan & Cromwell LLP’s Criminal Defense and Investigations Group. From 1996 to 2004, Mr. Peikin served as an Assistant U.S. Attorney in the Southern District of New York. He was Chief of the Office’s Securities and Commodities Fraud Task Force, where he supervised some of the nation’s highest profile prosecutions of accounting fraud, insider trading, market manipulation, and abuses in the foreign exchange market. Mr. Peikin received his bachelor’s degree from Yale University and a law degree from Harvard Law School, both magna cum laude. Following law school, he served as a law clerk to the Honorable J. Edward Lumbard, U.S. Circuit Judge, Second Circuit, and the Honorable Robert P. Patterson, Jr., U.S. District Judge, Southern District of New York. Mr. Peikin is Adjunct Professor of Law at NYU Law School, has been a Visiting Scholar at Harvard Business School, and is President of the Board of Directors of the Center for Hearing and Communication, a nonprofit health and human services agency for the deaf and hard of hearing.
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