On November 15, 2013, Commissioner Daniel M. Gallagher offered informal remarks at Columbia Law School on leading issues in securities regulation and enforcement. He chose to focus his comments on the imposition of corporate penalties in enforcement matters. He stated, "the amounts of the penalties that the SEC imposes against corporations today are eye-popping and likely would have shocked the legislators who voted for the Remedies Act and the Commission that sought penalty authority from Congress." Because shareholders are the individuals who ultimately shoulder the cost of corporate penalties, he went on to say, "[t]he single most important issue in this analysis is whether the shareholders have received an improper benefit from the corporation’s misconduct." His view is that this is the required resulted based on the text and legislative history of the Securities Enforcement Remedies and Penny Stock Reform Act of 1990, Pub. L. No. 101-429, 104 Stat. 931 (1990).
Although likey a correct interpretation of the law, these remarks will almost certainly raise concerns from those who are not fans of corporate liability. This is because corporate penalties often prove to be a distraction from pursuing those who actually are most responsible for the wrongdoing.