SEC Judge May Temper Agency Focus On Compliance Pros

August 06, 2015

Fenwick securities enforcement co-chair Mike Dicke was quoted in a Law360 article on a recent SEC ruling in which Judge Cameron Elliot made a rare decision against imposing sanctions on a compliance officer. Judy K. Wolf, a former compliance officer at Wells Fargo, did not receive penalties even though she added information to a record during an SEC investigation of an insider trading plot.

However, Wolf may still face disciplinary action if the enforcement division appeals the decision to the commission, Dicke told Law360.

“It’s going to gnaw at them that they didn’t get any sanctions," said Dicke, a former U.S. Securities and Exchange Commission (SEC) enforcement official himself.

The commission will likely try to give Wolf a penalty of some nature and a cease-and-desist order on appeal, Dicke told Law360. Through the appeal, the commission could also deliver an opinion that more deeply explores the liability of compliance officers, he said.

However, Dicke acknowledged that the enforcement division may also decide against an appeal. The appeal “might just antagonize the whole compliance profession even more, and they really don’t want to do that,” he said.

Both SEC Commissioner Daniel Gallagher and Judge Elliot have raised concerns that the SEC treats compliance officers too harshly, according to Law360. Elliot’s decision in Wolf’s case may mark a turn in this trend.

“They did win on liability,” Dicke said, referring to the enforcement division and Wolf’s case, “and they may just have to leave it there.”

The full article is available through Law360​. (Subscription required.)​​​​​​​