Time For a New Wells Commission

SEC Commissioner Paul Atkins recently called for the formation of a “new ‘Wells-like’ advisory committee to review the policies and procedures of our enforcement program. The Commission and the staff should welcome, not fear, such a review.” Remarks at the Eighth Annual A.A. Sommer, Jr. Corporate, Securities and Financial Law Lecture, October 9, 2007 (the full text of Commissioner Atkins’ comments can be viewed here). 

The purpose of this Committee would be much the same as the original Wells Committee formed in 1972. According to then-Chairman Casey, that Committee was formed because it is “essential for the Commission to redouble its efforts to keep in touch with the best thinking on investor protection at the private bar, in the accounting profession, and in the financial community generally.”

Chairman Casey’s comments are as true today as they were when he made them thirty-five years ago – perhaps even more so. Today, the Division of Enforcement faces continued, difficult challenges. While the staff of that division has and continues to serve with distinction, working tirelessly to carry out its mission, a breath of fresh air and an induction of new ideas would serve to continue propelling it forward and continue its critical mission. This is particularly true now in the wake of various reports calling for reform and more. The recent GAO and Senate reports, for example, both point to a need for reform and improvement.

The recommendations of those reports are fortified by a review of cases brought by the Division. Despite many significant successes, some recent cases brought by the Division are years old – to the point of being stale. In other instances, courtroom losses such as the one in SEC v. PacketPort.com, Inc., Civil Action No. 3:05cv1747 (D. Conn. Filed November 16, 2005), discussed here last week, serve point to the obvious need for a new look and fresh ideas.

The mandate of this new Committee should be forward looking and not respective. Its charge should be to seek out the best ideas to assist the Division and the Commission as it moves forward to meet the increasing challenges of tomorrow, not to be critical of the past. In view of the critical and daunting mission of the Enforcement Division and its role in safeguarding the nation’s capital markets, we should demand no less. Hopefully, Commissioner Atkins’ call for new advisory committee on enforcement procedures will be quickly heeded.