42 Dropped Cases, 48 Lifted Bars, One Big 'Disaster': SEC Roundup

Welcome to SEC Roundup, a bimonthly video series by former Securities and Exchange Commission senior trial counsels Nick Morgan and Tom Zaccaro, founders of the nonprofit advocacy group Investor Choice Advocates Network.

The SEC recently dropped 42 enforcement actions — including many against small investment advisors — as a result of the SEC’s failure to separate the enforcement and judicial functions in its administrative proceedings.

The breach, which allowed SEC enforcement staff to have improper access to “adjudication memos” intended to provide legal advice to the SEC commissioners, also led the SEC to lift professional bars against 48 individuals, some going back decades.

In this episode, Morgan talks to Sarah Heaton Concannon, former member of the SEC’s executive staff and senior counsel to the co-directors of Enforcement, and Kurt Wolfe, co-host of the inSecurities Podcast.

Both Concannon and Wolfe are attorneys at Quinn Emanuel in Washington.

Concannon and Wolfe explain the significance of the SEC’s breach and how the agency has not fixed the underlying problem: the fact that the “judge” and the “prosecutor” in SEC administrative proceedings sit under the same roof when deciding enforcement matters against IAs, BDs and others.

“In total, we’re now looking at over 100 cases in which the SEC enforcement staff, the prosecutors … had access to the judges’ memos,” Wolfe explains.

“This is a disaster for the SEC,” according to Wolfe.

See the video above for the discussion with Concannon and Wolfe.