Boston partner Christopher Robertson was quoted in the October 18 issue of Compliance Week. According to the article, the Securities and Exchange Commission’s enforcement division may be changing the legal standard it uses to pursue companies and individuals involved in corporate misconduct. As a result, the SEC may file more cases based on negligence alone, rather than intentional wrongdoing or recklessness.
“The SEC's focus in using the negligence clause shows more of an attitude shift to tell the public that ‘yes, we cannot pursue all cases using costly methods, but we have to start somewhere,'” Chris commented. He went on to add that the SEC has limited resources that prohibit it from pursuing all cases on charges of fraud, since the cases are harder to prove and typically go on longer. Pursuing a case through negligence eliminates the need to prove intent.