[ by Howard Haykin ]

George Canellos, Acting Director of SEC Enforcement, said his division at the "inflection point" of redefining its priorities that previously were focused on conduct related to the 2008 credit crisis.  Investigators now are looking at the conduct of gatekeepers -  e.g., accountants, board members, new and evolving market technologies, and activity in the private-equity industry in an environment of low interest rates.

This is a change from 2010, when the SEC overhauled Enforcement with the creation of specialized regulator units to focus on structured products and other investments that helped fuel market turmoil in 2008 after the U.S. housing market collapsed. 

David Bergers, Enforcement's Acting Deputy Director says an enforcement advisory committee was set up to evaluate new priorities.  The panel's primary goal is to make it easier for SEC attorneys to investigate and litigate cases.  For example, Enforcement is beginning to focus on these new areas:

• enforcing subpoenas when companies delay in responding to requests for documents. 
• developing a tool to help predict accounting fraud, by mining information in public filings and identifying outliers in discretionary accruals.
• shaping industry conduct through the use of so-called 21a reports that enable the SEC to lay out the findings of an investigation even if the agency doesn't intend to file an enforcement action.

Insider Trading Still a Mainstay.   SEC officials remain focused on insider-trading cases, including the asset freeze filed 2/15/13 against unknown traders who reaped $1.7 million by trading out-of-the-money stock options in H.J. Heinz Co. just before a $23 billion takeover was announced.  Sanjay Wadhwa, a senior attorney in the NY Regional Office confirmed that, saying they'll continue to monitor for "well-timed bets ahead of merger and acquisition announcements."

Because the global M&A market has been relatively dormant up until now, any increased activity will simply increase the likelihood of more illegal trading.  [C-I Note:  Also, with the SEC's technology resources, large and/or unusual trading or patterns of trading are more easily identified - providing a "large crop of low-hanging fruit" for SEC investigators.  

For further details, go to:  [Bloomberg, 2/22/13].