As we all know, the investment management and hedge fund industries will be undergoing a sea change as Congress and the SEC and other government agencies respond to many events which have completely affected and disjointed our capital markets and economy.  I believe that it is up to the hedge fund community to show leadership in these times and help to create a solution to the issues which affect both managers and investors – namely, probable future hedge fund regulations.

In the coming weeks I will be promulgating proposals for the hedge fund community (and the SEC and Congress) to consider during the discussion of the best way to impose future regulations.  Senatory Grassley has specifically stated he plans to renew hedge fund registration requirements.  As recent congressional testimony indicates, the hedge fund community is open to reasonable regulations.  The issues faced by the community (and investors) cannot be solved solely by the SEC, Congress or the hedge fund community disparately, but by all of these groups working together.

I recently read a speech, posted below, by Linda Chatman Thomsen, the SEC’s Director of the Division of Enforcement.  This speech provides a very inspirational (and ideal) view of the SEC which makes me proud in many respects (especially when I realize that the SEC is there to protect people like my parents and grandparents).  I believe that by working with the SEC toward mutual goals the hedge fund industry will be able to (i) build a solid foundation for future growth and (ii) provide the investing public in general with a positive image of the industry.   

****

True to Our Mission: Why We Need the SEC

Remarks at the Ninth Annual A.A. Sommer, Jr. Corporate, Securities and Financial Law Lecture
by
Linda Chatman Thomsen[1]
Director, Division of Enforcement
U.S. Securities and Exchange Commission
Fordham University Law School
New York, New York

November 6, 2008

Several years ago, Dean Treanor referred to Al Sommer as “a giant in the field of securities law” — I couldn’t hope to come up with a more apt description. Moreover, he was a giant cavorting with other giants — Phil Loomis, Ray Garrett and Irv Pollack to name just a few. I am sorry I missed the opportunity to see the issues of the day debated and dealt with by some of the best minds of the century. I had planned right about now to share some of Commissioner Sommer’s own words with you. However, as I was including them in my draft, I received an email from the very efficient Ben Indek with his draft remarks, which, of course, included the quote you just heard and which I was going to share. Fair is fair — Ben got there first, so I had to abandon quoting Commission Sommer’s very inspiring views about enforcement, which, as Ben predicted, I do quite profoundly share. And speaking of sharing views, mine are my own and do not necessarily reflect the views of the Commission or any other member of the staff.

Anyway, it turns out that Ben’s finding that particular quote first led me to find an even more apt quote for my remarks this evening. In that same 1974 speech, Commissioner Sommer described a time not dissimilar to today and implicitly issued a challenge. As to the time, he said: “The environment in which we find ourselves today is one in which there has developed perhaps more distrust of American industry and its financial practices than there has been at any time since the late 20’s and early 30’s. Our sensibilities have been assaulted by too many instances of gross misconduct by management . . . Making these events of even greater public note is the fact there has been a steady growth . . . of public involvement in the securities markets. . . . Beyond that, as a consequence of interests in pension funds, investment companies and other forms of pooled investment, innumerable others have indirect interests in American industry and its integrity. . . . During this period there had been the erosion of confidence . . . Added to this mix has been the vigilance of the financial press which has frequently found in financial debacles of substantial companies plenty of meat for sensational stories that command a great reader interest.”[2] If I did not know better, I would say he was talking about today. But it was 1974.

After this assessment of the then-current state of affairs, Commission Sommer turned to his implicit challenge: “Every institution, every traditional practice has been called before the court of public opinion and compelled to justify itself in terms of today’s needs. It is no longer enough to say that we should do it this way because it was done that way yesterday. . . . There is the compelling need of rejustification by every role player in society of his role and the manner in which it is played.”[3] It is that challenge I’d like to take on this evening.

As we all struggle with the current market crisis, the SEC’s 75th anniversary is rapidly approaching, and the confluence of these events has led me to reflect on the mission and history of the agency it is my very great privilege to serve. This is an agency that was born of crisis and has been dealing with crises ever since. No one would dispute these are difficult times — difficult for businesses, difficult for Wall Street, difficult for regulators but, most of all, difficult for investors who have seen the value of their investments plunge in a matter of weeks. This is an ideal time for us, at the SEC, to renew our commitment to our mission, a mission that, I believe, makes the SEC unique and makes our role today more important than ever.

The SEC was created in the aftermath of the stock market crash of 1929, and in the midst of the Great Depression. Following the stock market crash, Congress recognized that public confidence in the securities markets had plummeted and that, for the economy to recover, the public’s faith in the capital markets needed to be restored. As part of that effort, Congress established the Commission as part of the Securities Exchange Act of 1934 and tasked it with enforcing the newly-passed securities laws, promoting stability in the markets and, most importantly, protecting investors.

Our mission was then, and is now, to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation. That mission guides us in everything we do, whether it is the cases we bring, the rules we write, or the disclosures we require. And never has it been clearer that those three concepts are actually all part of the same concept: you cannot raise capital without investors; markets do not function at all, let alone well, without investors; and investors never can be protected fully unless the businesses in which they invest and the markets which they frequent treat them fairly. Thus, it all comes down to investors.

As Chairman William O. Douglas (later Associate Justice of the U.S. Supreme Court), so aptly put it in his now famous phrase, the SEC is “the investor’s advocate.” Normally that phrase is heard just that way, but it is in its larger context that you see its larger significance. Chairman Douglas said “[w]e have got brokers’ advocates; we have got Exchange advocates; we have got investment banker advocates; and we are the investor’s advocate.”[4] Chairman Douglas’ famous quote is even truer today — while other participants in the securities markets have someone to look after their interests, we remain the only federal agency that is dedicated to looking out for the interests of investors. Of course, the larger investors in our markets tend to be well-represented, but not the most vulnerable — Main Street investors looking to build their retirement savings and pay their kids’ college tuitions — and it is for them that our mission remains, as it has always been, particularly vital.

As former Chairman William Casey said, “we must never forget that we are dealing with a priceless asset, the repository of the retirement hopes and educational aspirations of millions of Americans, a unique barometer of our economic health and engine of our economic progress. What does it take for our markets to achieve these great purposes. The markets themselves must have characteristics of liquidity and sensitivity to economic reality. They must be honest and fair and orderly. The public must have confidence that those characteristics prevail. Broad public participation is essential to liquidity. Full disclosure is essential to public confidence.”[5]

Prior to our current financial crisis, an intense debate was raging regarding whether a strong securities regulatory framework helped or hindered companies’ competitiveness in today’s international markets. Reports, including the Interim Report of the Committee on Capital Markets Regulation and a McKinsey report, which was commissioned by Senator Charles Schumer and Mayor Michael Bloomberg to assess the state of the financial markets here in New York City, both claimed that the United States was losing its competitive position to other market centers.[6] Among other things, they claimed that over-regulation was making our markets less competitive and argued that unless regulation, enforcement and civil litigation were curbed, the United States would lose its preeminence as the financial center of the world. There were suggestions that an intense investor protection focus was simply too costly from a competitive standpoint.

While we do not have the time to revisit this debate in detail today, as interesting as it might be, it seems fair to say that recent events demonstrate that investor confidence is essential to market viability, and that strong and effective regulation is vital to the healthy functioning of the capital markets. The SEC has a critical role to play, through regulation and enforcement, in rebuilding the confidence in our markets and financial institutions that has been lost. As Chairman Chris Cox recently observed, “[i]f the SEC did not exist, Congress would have to create it.”[7]

Other agencies and institutions in our financial system serve equally critical, but different, functions as the SEC. Each agency was created to perform a particular function within the economy and reflects the historical context of its creation. Take a look, for example, at the Department of Justice, a department we are very proud to work with in matters of securities law enforcement. The Department of Justice is the central agency for enforcement of all federal laws. By necessity, Justice enforces a broad spectrum of federal laws — pertaining to everything from tax, to copyright, to the environment, to agriculture, to banking, to terrorism, as well as a full panoply of federal crimes, including securities crimes. It has the lofty mission “[t]o enforce the law and defend the interests of the United States according to the law; to ensure public safety against threats foreign and domestic; to provide federal leadership in preventing and controlling crime; to seek just punishment for those guilty of unlawful behavior; and to ensure fair and impartial administration of justice for all Americans.”[8] That is quite a mandate, and the resources the Department of Justice can devote to pursuing securities fraud are correspondingly limited. I will be the first to tell you that investigating securities fraud is not easy — our markets and the securities they offer can be extremely sophisticated and complex, so there is a real need for market expertise and a specialized enforcement staff (backed up, I might add, with the expertise that can be found in other divisions and offices at the Commission including Trading and Markets, Corporation Finance, Investment Management, the Office of Compliance Inspections and Examinations, the Office of the Chief Accountant, and the Office of Economic Analysis, to name a few). Indeed, it was the recognition of these facts in the 1930s that led Congress to create the SEC as an independent agency that was dedicated exclusively to maintaining the integrity of the markets and protecting investors.

The banking agencies, on the other hand, are tasked with supervising and ensuring the safety and soundness of the nation’s banking system, the importance of which no one would question today. The Federal Reserve System was founded by Congress in 1913 to serve as the nation’s central bank and to provide the nation with a safer, more flexible, and more stable monetary and financial system.[9] The Office of the Comptroller of the Currency, part of the Department of the Treasury, has a mission of ensuring a stable and competitive national banking system.[10] The Federal Deposit Insurance Corporation oversees the safety and soundness of the banks subject to its oversight, in addition to its very important deposit insurance function.[11]

While different, our multiple missions are compatible. Often, in pursuing its own important mission, one agency advances the mission of another. But no other federal agency has, as does the SEC, a primary mission of protecting investors. We have multiple ways of advancing that mission — through regulation, through inspections, and through enforcement. Our regulatory expertise informs our law enforcement efforts, just as our investigatory and examination findings inform our regulatory efforts. And we manage to do it all in one of the smallest of the major government agencies. While the Department of Justice has over 100,000 employees and the banking agencies, combined, boast over 27,000, we have only about 3,500 employees nationwide.[12]

What does it mean to be the investor’s advocate? To many people, the Enforcement Division is very much the public face of the SEC. But in addition to enforcement, the Commission carries out its mission through our market supervision role, our rulemaking and guidance function, our disclosure review process, our examination program, and our investor education efforts. While most of these regulatory roles have much broader implications and far broader impact than, for example, a single enforcement action against one crooked ponzi scheme operator, it is our enforcement actions that seem to fascinate people the most, perhaps because they tell stories. Compelling stories. Stories that are very often about greed and, I hope, always about justice and fairness — the outcomes we constantly strive for. We all know that Americans love stories about justice and fairness — just look at the success of the three different versions of Law & Order on television. Justice stories have good guys and bad guys, reliable and not-so-reliable witnesses, shifty informers, hard-working cops, relentless detectives, government prosecutors, gavel-banging judges, and wise, even-handed juries.

The cases brought by the Enforcement Division at times have all of these features, which might explain part of the public fascination with Enforcement. Joseph Kennedy, in his second speech after being appointed the SEC’s first chairman, could have provided the voiceover for the beginning of one of these episodes of Law & Order when he said, “[l]et me stress with all the sincerity at my command the earnestness of our purpose. We of the Commission are neither coroners nor undertakers. We seek to create and to restore in order that enterprise and confidence may be reestablished. We are not prosecutors of honest business, nor defenders of crookedness. . . .We shall not pre-judge, but we shall investigate. . . . Only the senseless, vicious, and fraudulent activities will be curtailed, and these must and will be eradicated.”[13]

Being the investor’s advocate is not an easy role, and is sometimes not a popular role. It is natural now to take for granted the well-established principles of law created by historic Commission cases and important enforcement tools that have become a well-accepted part of the securities regulatory framework. Many of these developments, however, were controversial at the time and were successful only because of the creativity and tenacity of the Commission staff, traits that have characterized the SEC’s staff from the agency’s beginnings.

Felix Frankfurter, soon to be Justice Frankfurter of the Supreme Court, eloquently described these characteristics in a letter to President Roosevelt detailing the attributes he thought Roosevelt should look for in populating the SEC: “And so plainly you need administrators who are equipped to meet the best legal brains whom Wall Street always has at its disposal, who have stamina and do not weary of the fight, who are moved neither by blandishments nor fears, who in a word, unite public zeal with unusual capacity.”[14] Although it is nearly 75 years later, this quote remains an accurate description of the qualities we need at the Commission and, I might add, an accurate description of my many wonderful colleagues.

Today we take for granted, for example, the breadth of the prohibitions against insider trading, but it was only in the 1960s, beginning under Chairman William Cary and continuing under Chairman Manny Cohen, that the SEC began to bring the key cases that developed the theories of insider trading on which we rely today.[15] And those developments continued for not years, but decades — it was not until 1997 that the misappropriation theory of insider trading was firmly established in the O’Hagan case.[16] Under the leadership of Irv Pollack, the Commission’s first director of Enforcement, the Commission, in a heavily litigated series of cases, established its authority to seek critical investor-protection remedies, such as disgorgement, the appointment of receivers, and other ancillary relief. Today, these remedies are well-accepted and commonly used, and many have been codified into our governing statutes. And again, it took time. It was not until 1990 that broad penalty authority was established. In the 1970s, Stanley Sporkin, the Commission’s second director of Enforcement, initiated investigations into questionable foreign payments by many well-known American corporations, despite a broad outcry that everyone was doing it and that American corporations would not be able to compete internationally without paying bribes.[17] Sporkin’s innovative use of legal theories in these cases and his role in leveraging the Commission’s limited enforcement resources through the development of the “voluntary disclosure program” were revolutionary at the time. The questionable payments initiative led to not only an unprecedented number of actions against many of the best-known corporations in America, but also the adoption of the Foreign Corrupt Practices Act in 1977 and the acceptance of the internal investigation as an integral tool in corporate self-governance.[18]

The Commission continues today to push the development of the securities law when we believe doing so is necessary to protect investors because we know that, in many instances, if we don’t do it, no one will. I submit to you that no other agency, here or abroad, has as innovative and as consistent a record of investor protection.

Speaking of insider trading and colorful cases, some of the most colorful and memorable cases we have brought throughout the years involve insider trading. Effectively prosecuting insider trading cases is essential to our investor protection efforts because it goes to the heart of what it means to maintain fair markets. As former Chairman Manny Cohen said, “the problem of ‘inside information’ is one that has tremendous impact on public confidence in the fairness of the securities markets. That confidence, so necessary to the continued healthy growth of our markets, cannot be preserved if there is a belief — indeed only a suspicion — that insiders are taking advantage of information gained by virtue of their relationship to the company or possession of privileged information . . . .”[19]

Today, our insider trading cases range from Wall Street to Main Street. In the last fiscal year, the SEC brought its highest number ever of insider trading cases, including actions against a broad range of defendants, such as the former Chairman and CEO of Enron Energy Services; a former partner at the accounting firm of Ernst & Young; three Ft. Lauderdale doctors; and the mayor of Beaufort, South Carolina.[20] About a year and a half ago, we and the United States Attorney for the Southern District of New York brought insider trading cases alleging a particularly colorful set of facts — employees of big Wall Street firms, lawyers, bankers, and hedge fund managers, who engaged in insider trading; millions of dollars; years of trading and thousands of trades; kickbacks; and elaborate attempts to cover up the scheme. Earlier this week, one of the architects of this scheme was sentenced to a prison term of six-and-a-half years.[21]

While the pursuit of high profile insider trading cases is one example of how the SEC promotes investor confidence in our markets, the SEC’s enforcement actions provide far more than just confidence. Whenever possible, the SEC provides direct financial compensation to injured investors as well. Indeed, in each of the last two years, the SEC has distributed about a billion dollars to harmed investors.

And the Commission is set to outdo itself by orders of magnitude this year, expecting to distribute to investors over $50 billion — the largest settlement sums in its 75-year history — to be paid by broker-dealers in the auction rate securities market, which froze last February. This relief is unprecedented in type, magnitude, and timing. Tens of thousands of investors are having billions of dollars of liquidity restored to them less than a year after the auction rate securities market froze. To date, the Enforcement Division has entered into settlements–in-principle with six of largest broker-dealer firms that underwrote, marketed and sold auction rate securities. The proposed settlements would include charges alleging that the firms misrepresented to their customers that auction rate securities were safe, highly liquid investments that were equivalent to cash or money market funds. The proposed settlements would allege that these firms failed to disclose the increasing risks associated with auction rate securities, including the firms’ reduced ability to support the auctions. Under the settlements-in-principle negotiated by the Enforcement Division, investors in auction rate securities at a number of firms, including retail customers, small businesses, and charitable organizations, will have the opportunity to receive 100 cents on the dollar on their investments, and within short time frames.

Some of our cases involve millions or, as in the auction rate securities cases, billions of dollars, broad classes of investors, and large corporate defendants from the highest echelons of American business, while others involve comparatively small investments, a handful of investors, and only one or two fly-by-night promoters. What these cases have in common, however, is our zealous protection of individual investors from fraud and misconduct in our financial markets — regardless of specific context. No market participant is so large or powerful as to be above the law and no one violating the securities laws is so anonymous or obscure as to be beneath our attention.

The ongoing subprime mortgage and credit markets crisis has already generated enforcement actions against some of the largest firms in the financial services industry. But even in addressing the most dramatic financial crisis in American history, the SEC has still shown concern for individual investors, especially those who are most vulnerable. Last month, the SEC sued five Los Angeles-area brokers alleging securities fraud for a scheme involving subprime mortgages. The SEC alleged that the brokers pushed unsophisticated customers to refinance their homes with subprime mortgages that they could not afford so they could use the proceeds to purchase securities that were unsuitable for them. The SEC alleged that the five brokers, who were all registered representatives of the same securities firm, paid themselves high commissions on both the subprime mortgages and the securities purchases. The customers generally were of modest means, had little prior investment experience, and had little or no formal education beyond high school. Some of the customers did not speak English fluently or at all. We alleged that they were induced to enter into transactions that put their very homes at risk. For many of these investors, we were their only advocate.[22]

The Enforcement Division regularly brings the same level of attention and commitment to prosecuting small-scale ponzi schemes and affinity frauds. We view affinity frauds as particularly important for us to prosecute because they involve a betrayal of investors’ trust in people they believe are inherently motivated to represent their interests. Last year, for example, we brought actions in which we alleged that the defendants fraudulently raised millions and millions of dollars from, in one case, Orthodox Jews; in another, African Americans; and in a third, a close-knit Christian community. In these cases, we claimed that the perpetrators sought to exploit community interests to advance their own financial interests.[23]

We recently received a favorable decision in a case I bet no one in this room noticed. This is not a case that attracted headlines; it is not a case where anyone involved, victims or respondent, is a household, or even a financial news, name. The numbers involved are measured in thousands, not millions, and certainly not billions of dollars. The case was against an individual who sold her clients interests in an allegedly fraudulent investment scheme that operated similarly to a ponzi scheme.[24] Although we did not allege that the respondent was the primary architect of the fraud, we claimed she sold the investments, over a four-month period, to about 50 people, who invested a total of about $1.49 million. The respondent herself made about $63,000 from the sales. The administrative law judge held three days of hearings on the case, heard testimony of 19 witnesses, was presented with 90 exhibits, and issued a 37-page opinion. In that opinion you meet some of the investors.

Now I suppose you could wonder about the expenditure of resources on a case like this. But we believe cases like this are just as important as our $50 billion auction rate securities cases, maybe more so. These cases protect people investing small amounts of money, and send an important message that we value the vulnerable; that every investor is important to the credibility of our markets; that if any investor is not safe in our marketplace, ultimately the marketplace becomes weak. Chief Administrative Law Judge Brenda Murray, in imposing the highest tier penalty in the case, explained that “[the respondent’s] actions were egregious in what she did and to whom she did it. She knowingly, or utterly recklessly, advocated the most speculative type of investment to people of moderate means, many of whom used their retirement funds to make the investment. . . . The results of [respondent’s] actions have been devastating to the finances of most of the people who trusted her . . . . Some of these people were wary of investing before this experience which has likely caused them to abandon it altogether.”

I have talked to you today about the role of the Commission as the investor’s advocate, and our efforts here in Enforcement to carry out that mission through the years. In that spirit, and in the spirit of the agency’s upcoming 75th anniversary, I’d like to end my remarks with several observations and questions. “Whatever may be true of other agencies with other jurisdictions, it often seems today that the work of the SEC has just begun. Is it worth the effort? Is the notion that capital is allocated best by the free decisions of individual investors, fully informed, naïve, or at least unobtainable? Is it impossible to provide, and maintain securities markets so fair and efficient that they will be attractive repositories for savings? Can we, indeed ever succeed in instilling and preserving in Americans general confidence in our present system for the ownership and management of the means of production and distribution? We are confident that it can be done and that we can help do it. That is the job before us . . . .”[25] I wish I had actually come up with those observations and questions, but they, like the words of Commissioner Sommer we heard earlier, were first uttered in 1974 — in this instance, by Chairman Ray Garrett on the occasion of the SEC’s 40th anniversary. The job he described was the job before us then; it is the job before us now. It is, quite simply, our job.

________________________________________

[1] The Securities and Exchange Commission disclaims responsibility for any private publication or statement of any SEC employee or Commissioner. This speech expresses the author’s views and does not necessarily reflect those of the Commission, the Commissioners, or other members of the staff.

[2] The SEC and the Accounting Profession: “Creative Tension,” Remarks of A. A. Sommer, Jr., Commissioner, U.S. Securities and Exchange Commission, before the 25th Annual Meeting of the Northeast Regional Group of the American Accounting Association, Philadelphia, Pennsylvania (Apr. 19, 1974), available at http://www.sec.gov/news/speech/1974/041974sommer.pdf.

[3] Id.

[4] See Joel Seligman, The Transformation of Wall Street 157 (3d ed. 2003).

[5] The Public Interest in Our Securities Markets, Remarks of William J. Casey, Chairman, U.S. Securities and Exchange Commission, at the Institutional Trading Conference, New York, New York (June 17, 1971), available at http://www.sec.gov/news/speech/1971/061771casey.pdf.

[6] Committee on Capital Markets Regulation, Interim Report of the Committee on Capital Markets Regulation (Nov. 30, 2006), available at http://www.capmktsreg.org/pdfs/11.30Committee_Interim_ReportREV2.pdf; McKinsey & Company, Sustaining New York’s and the US’ Global Financial Services Leadership (Jan. 22, 2007), available at http://www.nyc.gov/html/om/pdf/ny_report_final.pdf.

[7] Testimony Concerning the Role of Federal Regulators: Lessons from the Credit Crisis for the Future of Regulation, Christopher Cox, Chairman, U.S. Securities and Exchange Commission, before the Committee on Oversight and Government Reform, United States House of Representatives (Oct. 23, 2008), available at http://www.sec.gov/news/testimony/2008/ts102308cc.htm.

[8] See http://www.usdoj.gov/02organizations.

[9] See The Federal Reserve System Purposes & Functions, at http://www.federalreserve.gov/aboutthefed/default.htm.

[10] See http://www.occ.treas.gov/aboutocc.htm.

[11] See http://www.fdic.gov/about/mission/index.html.

[12] See U.S. Securities and Exchange Commission, 2007 Performance and Accountability Report, at http://www.sec.gov/about/secpar/secpar2007.pdf; U.S. Department of Justice, FY2009 Budget and Performance Summary, at http://www.usdoj.gov/jmd/2009summary/; The Federal Reserve Board, 2007 Annual Report, at http://www.federalreserve.gov/boarddocs/rptcongress/annual07/default.htm; Federal Deposit Insurance Corporation, 2007 Annual Report, at http://www.fdic.gov/about/strategic/report/s007annualreport/index_pdf.html; Office of Thrift Supervision, Annual Report for Fiscal Year 2007, at http://files.ots.treas.gov/481036.pdf; Office of the Comptroller of the Currency, Fiscal Year 2007 Annual Report, at http://www.occ.treas.gov/annrpt/2007AnnualReport.pdf.

[13] Remarks of Joseph P. Kennedy, Chairman, U.S. Securities and Exchange Commission, before the Boston Chamber of Commerce, Boston, Massachusetts (Nov. 15, 1934), available at http://www.sechistorical.org/collection/papers/1930/
1934_11_15_Kennedy_Boston_Sp.pdf.

[14] Letter from Felix Frankfurter to President Roosevelt, May 23, 1934, available at http://www.sechistorical.org/collection/papers/1930/
1934_05_23_Frankfurter_to_FD.pdf.

[15] See Seligman, supra note 4, at 344-47, 357, 362; SEC Historical Society Oral Histories Committee, Roundtable on Enforcement: A Brief History of the SEC’s Enforcement Program 1934-1981 (2002), at http://www.sechistorical.org/collection/papers/200/
2002_0101_SECHS_RT_Enfrmnt_Hawke.PDF.

[16] U.S. v. O’Hagan, 521 U.S. 642 (1997).

[17] Seligman, supra note 4, at 539-48.

[18] Id.

[19] Disclosure: The SEC and the Press, Remarks of Manuel F. Cohen, Chairman, U.S. Securities and Exchange Commission, at the University of Connecticut’s G.M. Loeb Awards Luncheon, New York, New York (May 21, 1968), available at http://www.sechistorical.org/collection/papers/1960/1968_0521_Cohen_speech.pdf.

[20] SEC v. Lou L. Pai, Lit. Rel. No. 20658 (Jul. 29, 2008); SEC v. Zachariah P. Zachariah, et al., Lit. Rel. No. 20564 (May 12, 2008); SEC v. William J. Rauch, Lit. Rel. No. 20646 (July 16, 2008).

[21] Grant McCool, Judge Sentences Ex-UBS Exec to 6-1/2 Years Prison, Reuters, Nov. 4, 2008, available at http://www.reuters.com/article/businessNews/idUSTRE4A31AZ20081104?feedType=RSS&feedName=businessNews.

[22] SEC v. Ainsworth, et al., Lit. Rel. No. 20768 (Oct. 3, 2008).

[23] SEC v. Steven Byers, et al., Lit. Rel. No. 20678 (Aug. 11, 2008); SEC v. Jeanetta M. Standefor, et al., Lit. Rel. No. 20575 (May 14, 1008); SEC v. Alanar, Inc., Lit. Rel. No. 20629 (June 25, 2008).

[24] In re Maria T. Giesige, Initial Decision Rel. No. 359 (Oct. 7, 2008).

[25] Life Begins at Forty, Remarks of Ray Garrett, Jr., Chairman, U.S. Securities and Exchange Commission, at the Dean’s Day Program, New York University Law School, Distinguished Citizen Award, New York, New York (Oct. 26, 1974), available at http://www.sechistorical.org/collection/papers/1970/1974_1026_GarrettFortyT.pdf.

http://www.sec.gov/news/speech/2008/spch111508lct.htm