Speech by SEC Commissioner:
Remarks at the Closing of the International Institute for Enforcement and Market Oversight

by

Commissioner Elisse B. Walter

U.S. Securities and Exchange Commission

Washington, D.C.
November 6, 2009

Thank you, Scott, for that kind introduction.

Good afternoon. I would like to congratulate and thank you for your participation in the Securities and Exchange Commission's 2009 International Institute for Securities Enforcement and Market Oversight. It is a real pleasure to join you here today at the successful conclusion of a week-long program. This program, the 15th annual meeting of the Institute, has brought together over 150 regulators representing 50 countries and jurisdictions from around the globe for intense training and discussion on the most significant issues of securities enforcement.

The SEC is the result of a crisis; it was formed after the Great Depression. Since that time, we have weathered many storms. The Commission is a much different agency today than we were when we were formed, or even just ten years ago. We are continuing to evolve and to learn from our history — both the highs and the lows. It is imperative that the SEC, and all securities authorities, have the capacity to evolve quickly and adapt and respond to new challenges. While it's said that the current crisis, in particular, and all crises, in general, is the "mother of invention," we also hope that this Institute offers an opportunity to learn from the mistakes, as well as the successes, of others, and collect best practices from around the world to adopt, as appropriate, into our own enforcement programs.

The SEC conducts programs such as this Institute because the strength of any one market is dependent on the strength of all our markets, and that is increasingly true every day, and the strength of one enforcement program is dependent on the strength of all other enforcement programs. Thus, we are each here because, mutually, we are looking for partners to help strengthen our ability to police our markets.

Capital markets always have, and always will have, their share of insider traders, market manipulators, companies cooking their books, and pyramid schemes. Left unchecked, any of these very "traditional" securities frauds can bring a capital market to its knees. A securities authority simply MUST have the right tools in its toolbox to act quickly to stop financial frauds like insider trading and market manipulation — and I know there has been much discussion during this Institute about these tools. You have also heard how these frauds are no longer confined to one market — at least one-quarter of all SEC cases now have an important international component — and we are spending more time than ever assisting you with your cases, and asking you for help with ours. The only way for these tools to work in an environment of international financial markets and cross-border securities transactions is through the continued and enhanced cooperation of regulators.

The current crisis is offering many lessons to be learned in enforcement and combating securities fraud. We are still sorting through all of them — and we certainly don't have all the answers yet. We do know, however, that many of the solutions for countering fraud will require international cooperation. In this regard, we are so pleased to be with you this week and to host this forum. We need to build and maintain a solid network of securities authorities that can seamlessly work with each other to enforce our laws and regulations. The stakes are high. Capital markets are the most powerful and efficient engines for economic growth, and our work can have a tremendous impact on their integrity.

No matter what new shape is constructed for financial regulation here or in each of your countries, it must incorporate strong enforcement powers for regulators to pursue wrongdoing and deter future misconduct, and those powers must be a complement to regulatory authority, and not an afterthought. Enforcement is often our most public face. Every year, here in the United States, the SEC initiates hundreds of enforcement cases to impose penalties for and remedy violations of the U.S. federal securities laws. In fiscal 2008 alone, the SEC brought 671 enforcement actions against 1635 defendants for insider trading, financial reporting fraud, market manipulation, offering frauds like pyramid schemes, and violations by broker-dealers and investment advisors. The U.S. securities self-regulatory organizations brought many hundreds more cases, and the SEC assisted law enforcement agencies in the United States and around the world with criminal cases. Vigorous enforcement is critical, especially in times like these when investor confidence has been so badly shaken. Enforcement is the most visible way in which the regulators can make sure that market participants understand the boundaries of legal conduct and deter potential wrongdoers and recidivists from crossing those lines. It can also be an effective way to help restore investor confidence in our financial markets.

Why is a vigorous enforcement program good for a securities market? First, there has always been, and always will be, fraud in financial markets. No amount of regulatory oversight, rules and regulations, or risk-based supervision can prevent financial fraud and market abuse. Second, studies have confirmed that those markets with the strongest enforcement have the lowest cost of capital and the highest financial sector development. This means a more efficient market, more jobs, more economic growth, and more poverty reduction. The bottom line is, develop your enforcement program and you can help unleash the potential of your securities markets, the most efficient and powerful engines of economic growth in existence.

For the past 15 years, this Institute has been one of the SEC's flagship programs for promoting the quality of securities enforcement around the globe, and strengthening and deepening international cooperation among securities regulators. It is now, when the world's financial and securities markets are facing historic challenges, that we truly understand the vital importance of programs such as this one. We must all take to heart the lessons we have learned over the past week and redouble our efforts to protect our investors and our markets through enforcement.

Finally, I want to once again extend my appreciation to all of you for coming from so far to share this time with us. We cherish the professional and personal relationships that these Institutes' engender. The work that you do is important, not just to your market alone but also to global economic growth. We look forward to working with you all in the future, and I wish you a safe and pleasant journey home.

Thank you so much for being with us this week.