Urska Velikonja

SEC officials didn't attend an annual conference for Wall Street bond dealmakers in Las Vegas last week, Bloomberg reports. The agency is bracing for deep spending reductions in President Donald Trump's budget proposal, the story says. "We're already seeing a quieter enforcement regime" since the change of administration, said Emory Law Associate Professor Urska Velikonja. "The number of enforcement cases is likely to be down considerably going forward."

U.S. prosecutors pursuing alleged bribery in Africa have Och-Ziff, one of the world's largest and most powerful hedge funds, in their sights. In addition to a large fine, U.S. authorities have said they now want individuals to be called to account for corporate crime, according to the Financial Times. Another worry for the company is potential loss of "qualified professional asset manager" status. "Losing QPAM would make life more difficult for Och-Ziff," said Emory Law Associate Professor Urska Velikonja.

Velikonja calculates that these "follow-on" cases have boosted the SEC's overall number of enforcement actions by between 23 percent and 34 percent from 2002 to the present.

Misleading numbers and a confused mission, the hallmarks of troubled financial firms, dog one of their regulators too

At a Toronto conference on the new use of freeze order powers to aid fraud victim restitution, Professor Urska Velikonja discussed the SEC's fair funds, which are set up post case resolution for victim restitution. Since a new law passed in 2014, Canadian regulators received 26 freeze orders from courts involving $9 million in assets, compared to eight freezes involving $1.3 million of assets in the year prior.

In the 2014 fiscal year, the SEC filed 755 enforcement actions, "the highest number of cases in the history of this commission," noted SEC Chair Mary Jo White. She's also noted that the agency levied a whopping $4.1 billion in penalties as part of those actions. Associate Professor Urska Velikonja says the SEC is padding "deeply flawed" enforcement statistics. In a study slated for publication in the Cornell Law Review, she calculates that the way the agency has counted the number of cases it has pursued has made it looked like a far fiercer and more effective sheriff than it may actually be.

The SEC's bad actor provisions automatically disqualify firms and individuals that break certain securities laws from using a streamlined process to offer securities to investors, Thaya Brook Knight writes in American Banker. But the SEC may waive the disqualification for defendants who can show good cause as to why the disqualification shouldn't apply to them. "A recent study by Urska Velikonja of Emory University School of Law, cited enthusiastically by the bill's supporters, reported that large firms received 82 percent of 201 waivers granted between July 2003 and December 2014," Knight writes, while ultimately arguing such waivers are appropriate and necessary.

In a Feb. 13 speech at the 37th Annual Conference on Securities Regulation and Business Law, SEC Commissioner Daniel Gallagher cited Emory Law Associate Professor Urska Velikonja's research on disqualification waivers. He said Velikonja's paper, "Waiving Disqualification: When Do Securities Law Violators Receive a Reprieve?" will be "very important for this debate."

The public outcry of two U.S. Securities and Exchange Commission members over a decision to give Oppenheimer & Co. a pass on being deemed a "bad actor" after it admitted to breaking securities laws has again stirred the debate over whether the agency needs to get tougher on recidivist firms. In its letter seeking relief, Oppenheimer laid out a detailed analysis of why there exists good cause for the firm to not be barred from Rule 506 offerings. "That is a direct consequence of [the SEC's two Democratic commissioners, Luis Aguilar and Kara Stein] being a little bit difficult when it come to waivers," said Emory Law Assistant Professor Urska Velikonja.

A push by U.S. Securities and Exchange Commission member Kara Stein to demand more from companies seeking waivers after enforcement actions likely adds to the uncertainty of negotiating a settlement with the agency. On Nov. 25, the SEC granted Bank of America Corp. and its Merrill Lynch broker-dealer business a temporary, conditional waiver from an automatic ban that keeps "bad actors" from participating in private securities transactions.

Professor Urska Velikonja's work is cited by The Economist, in an article that questions how the proceeds of large fines levied against corporations are administered. "The disarray stemmed from the lack of a coherent plan to compensate defrauded investors," the article reads. "In a forthcoming article in the Stanford Law Review Urska Velikonja, a professor at Emory University, argues that this reflects the failure to identify specific misconduct when setting up the deal."

Urska Velikonja conducts an academic study that tracks the money investors have received from the Securities and Exchange Commission's efforts to punish frauds and other financial crimes.

Decades ago, the boards of corporate America were occupied by the C.E.O. and the C.E.O.'s handpicked friends and colleagues. Today the independent director, an outside director who is not beholden to the chief, dominates the corporate board.