SEC Creates Specialized Enforcement Units

Among the specialized units unveiled by the Securities and Exchange Commission (SEC) is a unit focusing on investigations involving investment advisers.
The Enforcement Division of the Securities and Exchange Commission announced what it said is the most significant reorganization since its establishment in 1972. The division named leaders of national specialized units it has established in five priority areas dedicated to particular highly specialized and complex areas of securities law.

The SEC also created a new Office of Market Intelligence that is responsible for the collection, analysis, and monitoring of the hundreds of thousands of tips, complaints, and referrals that the SEC receives each year. The office be led by Thomas A. Sporkin, who assumes the role after serving as deputy chief in the Office of Internet Enforcement at the SEC since 2001. Previously, he was senior counsel and staff attorney in the SEC’s Division of Enforcement.

An SEC announcement said the new units and office will help provide the additional structure, resources, and expertise necessary for enforcement staff to keep pace with ever-changing markets and more comprehensively investigate cases involving complex products, markets, regulatory regimes, practices, and transactions.

The SEC said other initiatives are being undertaken by the division, including substantially expanding staff training programs, streamlining management, putting additional experienced investigators on the front lines, revising internal enforcement procedures, restructuring processes to ensure better sharing of information, leveraging the knowledge of third parties, and revamping the handling of tips.

Specialized Units

The SEC reorganization includes a new Asset Management unit, which will be led by Co-chiefs Bruce Karpati and Robert B. Kaplan. The unit will focus on investigations involving investment advisers, investment companies, hedge funds, and private equity funds.

Karpati was founder and head of the SEC's Hedge Fund Working Group, and has served as assistant regional director for the New York Regional Office of the SEC. Kaplan has served as assistant director of the SEC's Division of Enforcement.

The other new specialized units announced by the Enforcement Division are:

  • The Securities and Public Pensions unit will focus on misconduct in the large municipal securities market and in connection with public pension funds including: offering and disclosure fraud; tax or arbitrage-driven fraud; pay-to-play and public corruption violations; public pension accounting and disclosure violations; and valuation and pricing fraud. The unit will be led by Elaine C. Greenberg, who is the associate regional director of the Philadelphia Regional Office of the SEC and has served as the co-chair of the Division's national Municipal Securities Working Group. Previously, she was assistant regional director, branch chief, and staff attorney in the Philadelphia office.
  • The Market Abuse unit will be led by Daniel M. Hawke, who is director of the SEC's Philadelphia Regional Office, and will focus on investigations involving large-scale market abuses and complex manipulation schemes by institutional traders, market professionals, and others.
  • The Structured and New Products unit will be led by Kenneth R. Lench, who has served as assistant director, branch chief, assistant chief counsel, and senior counsel/staff attorney with the SEC's Division of Enforcement. The unit will focus on complex derivatives and financial products, including credit default swaps, collateralized debt obligations, and securitized products.
  • The Foreign Corrupt Practices unit will be led by Cheryl J. Scarboro, who has served as associate director, assistant director, deputy assistant director, and staff attorney in the SEC's Division of Enforcement, and will focus on violations of the Foreign Corrupt Practice Act, which prohibits U.S. companies from bribing foreign officials for government contracts and other business.