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SEC to Create Website of Bad Actors

In a recent speech, the SEC Chairman, Jay Clayton, announced that the SEC is creating a searchable website of those individuals that have been barred or suspended from the securities industry.  Mr. Clayton expressed concern that investors cannot uncover bad actors that have “shifted from the registered space…to the unregistered space.”  Mr. Clayton explained that the website “is intended to make the prior actions of repeat offenders and fraudsters more visible to investors.”

OUR TAKE: This “Scarlet Letter” approach to prevention ups the ante for those barred from the industry in civil enforcement actions.  It is unclear whether such a website will be any more or less effective than the CRD system, which reports disciplinary histories.

 

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