Gatekeepers in SEC’s crosshairs, Latham & Watkins alert reports

Mar 01, 2016
<p>In recap of key topics covered at SEC Speaks conference, increased liability risk for directors, auditors and others on 'neighborhood watch' stands out</p>

As US public companies continue to wrestle with the need to pursue dual-track internal investigations to comply with the SEC’s increased focus on individual liability, last month the commission reaffirmed its aim to go after individual gatekeepers such as auditors, lawyers, directors, underwriters, broker dealers, accountants, and transfer agents, even in the absence of client violation charges.

That was one of the highlights from the Practising Law Institute’s annual SEC Speaks conference, held in Washington, DC on February 19, that Latham & Watkins recapped in a client alert last week and which was posted yesterday on the JDSupra Business Advisor website. At the annual conference, senior representatives from the SEC’s enforcement division met to reflect on the division’s accomplishments in 2015 and to discuss enforcement priorities for 2016.

Deputy Director Stephanie Avakian asserted the need for gatekeepers to use professional judgment and said the SEC won’t second-guess good faith exercise of judgment consistent with applicable standards of conduct. But she also said the staff will seek to impose liability on gatekeeper for either falling short of professional, rule-based standards or industry regulations, and for acting inconsistently with affirmative representations.

To download Latham & Watkins’ complete client alert, visit the JDSupra Business Advisor website.

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