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SEC Takes Action against Head of Regulatory Reporting

The SEC issued a cease and desist order against the Head of Regulatory Reporting of a large investment bank for causing violations of the firm’s customer protection rule.  As previously reported, the firm agreed to pay $415 Million to settle the charges.  The SEC faults the respondent, who also served as the Financial and Operational Principal, with misleading regulators about the true purpose of certain synthetic transactions intended to reduce the amount held in the firm’s reserve account.  The SEC cites FINRA’s handbook which prohibits any window dressing designed to reduce the reserve formula.

OUR TAKE: It is noteworthy that the Head of Regulatory Reporting was the only individual specifically charged by the SEC in this action even though the firm paid a staggering settlement.  Regulatory officers, including CCOs and FINOPs, continue to be targeted by the regulators.


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