Stung by criticism that the Securities and Exchange Commission failed to prevent Bernard L. Madoff's massive Ponzi scheme, the agency has stepped up enforcement efforts to crack down on investor fraud and other scams.
With a new chairwoman, a new enforcement chief and a growing caseload, the agency has streamlined its internal procedures and gone to court with new urgency.
The SEC has obtained 27 emergency orders to freeze the assets of fraud suspects since the end of January, compared with seven during the same period one year ago, according to data released Thursday.
SEC staff and white-collar defense attorneys said they believed the upswing in enforcement could be attributed to the recession, which exposed frauds, and to a new attitude within the regulatory agency after Madoff.
In Los Angeles alone, the SEC regional office filed nine emergency asset seizures from January to April, a marked increase over prior years.
Among the targets were a Sherman Oaks investment manager accused of defrauding investors out of more than $17 million, an Irvine financier who allegedly defrauded Taiwanese investors out of hundreds of millions of dollars and a Beverly Hills hedge fund manager accused of operating a Ponzi scheme.
"These are four of the most exciting months of my career at the SEC, and I've been here 26 years," said Rosalind Tyson, director of the SEC's Los Angeles region, which enforces securities laws in Southern California, Arizona, Nevada and Hawaii.
"The pace has accelerated dramatically," said Patrick Hunnius, who worked four years as an SEC enforcement attorney and is now a partner at White & Case's Los Angeles office, specializing in securities law. "I think the turnover and the new director of enforcement at the SEC is having an immediate impact. . . . I think the pipeline moves a lot faster at the commission than it used to."
The SEC's new enforcement efforts were detailed Thursday by Robert Khuzami, its new enforcement chief, in testimony before a Senate subcommittee.
SEC Chairwoman Mary L. Schapiro has eliminated red tape that slowed investigations, allowing a single commissioner to approve subpoenas instead of requiring the full commission's approval as required under former Chairman Christopher Cox, Khuzami said.
In all, the commission has initiated 287 investigations since the end of January, a 32% increase from the 217 investigations it opened during the same period last year, he said.
