Hey, Control Persons and Individuals, the SEC is Targeting YOU!!
Despite past false starts and losses, the SEC has announced that it will continue to bring actions against individuals and control persons.
Many believe that such a focus by the SEC will lead to more litigation. Further, an individual's ability to defend these actions has been severely limited since the passage of the Dodd-Frank Act. The Dodd-Frank Act, now, allows the SEC to merely prove as the standard reckless conduct when alleging aiding and abetting violations in stark contrast to the previous standard of proving actual knowledge of the fraud being committed by another party. Additionally, given the SEC’s recent court injunction setbacks and settlement problems with federal judges, it is possible the SEC may use its administrative courts more, especially since the remedies in both forums are nearly identical. One exception to this switch may be, however, insider trading.
In short, if you are an individual or control person in the securities industry, there is no escape: the SEC is watching you.