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Speech by SEC Commissioner:
Remarks at SEC's International Institute for Securities Enforcement and Market Oversight


Commissioner Troy A. Paredes

U.S. Securities and Exchange Commission

Washington, D.C.
November 5, 2010

Thank you for the kind introduction. Many of you have traveled far to attend this week's program, and I want to express how much I appreciate your having taken the time to participate in the SEC's 2010 International Institute for Securities Enforcement and Market Oversight. I have tremendous respect for the hard work all of you do on behalf of investors and for your efforts to improve the quality and performance of securities markets. I commend your commitment to public service, as well as the dedication of the SEC staff, many of whom have participated in this week's proceedings.

This has been another terrific Institute, with delegates from nearly 60 jurisdictions joining us this year. The Institute strives to cover a host of topics that are key to effective and efficient securities enforcement and market oversight, and I hope that you agree that the program this year succeeded in doing so.

What you may not realize is how much we at the SEC benefit from having the opportunity to hear your thoughts and perspectives as you share your own views and experiences. Although the markets are always changing and evolving, one thing remains constant: There is always room for us to learn. And we do whenever we have the chance to engage with our colleagues from around the globe.

Before this event wraps up, I would like to take a few moments to offer some brief personal thoughts - thoughts that I hope complement what you have heard this week and that provide a glimpse at my own outlook on enforcement and market oversight as an SEC Commissioner. I should underscore that my personal views do not necessarily reflect those of the SEC or any of my colleagues on the Commission.

As regulators, we share a common challenge: We have limited resources. Each of us, therefore, has to ask a very basic question: How can we best advance our mission with the resources we have?

In deciding how to allocate our efforts as regulators, we have to make difficult choices. Enforcement and market oversight are no exception. As much as we would like to, we simply cannot pursue to the fullest extent each and every possible violation of the securities laws. Even with more resources, we still have to make tradeoffs - rooted in informed policy choices - in light of the costs and benefits of each action we take or decide not to take.

This leads to some practical challenges. Resources committed to a particular matter become unavailable for some other - perhaps better - purpose. What enforcement matters, then, should a regulator pursue and against which of the possible defendants? What charges should be brought? What relief should be sought? What's the optimal mix of cases to bring on the whole?

One starting point in answering these questions is to recognize that one of law enforcement's many purposes is to change the behavior of individuals by changing the consequences associated with certain conduct. In other words, law enforcement is intended, in part, to make illegal conduct an unattractive option. Law enforcement discourages individuals from engaging in illicit behavior when the expected sanction for a violation is such that compliance is the wiser course. It, therefore, is important for regulators, including the SEC, to position themselves to detect and swiftly pursue actions against wrongdoers.

This is harder than it sounds. Accordingly, I want to conclude with two suggestions for how we all can take meaningful steps in enforcing the law and overseeing securities markets more efficiently and more effectively.

The first suggestion is to continue developing our knowledge so that we can better surveil our markets and develop strong cases. The global financial system is increasingly complex and interconnected, making staying on top of the latest developments and anticipating what might come next especially important. Our collective expertise - which we constantly develop as we gain more nuanced insights into our markets and the behavior of investors, advisers, broker-dealers, corporate executives, and other market actors - empowers us as regulators in indentifying fraud and manipulation; in investigating leads; in determining the actions to bring; and in evaluating what sanctions are most appropriate.

This Institute and gatherings like it are one means by which we can learn from each others' experiences and thoughtful observations, making us all better at what we do.

My second suggestion is this: Securities regulators need to search for even more opportunities to cooperate. As more and more transactions occur across borders, it becomes increasingly important for regulators around the globe to cooperate in detecting and pursuing illicit conduct.

Many of the individuals in this room have a tradition of successful cross-border cooperation with each other. We need to make conscious efforts to build on our prior successes working together. One benefit of this week's program is that it provides a venue for longstanding relationships to be strengthened and for new friendships to be forged. Through effective international cooperation, we are able to get more out of our resources to the benefit of investors and securities markets.

In this spirit, we look forward to working with you in the future to strengthen the global financial system and to promote economic growth.

Thank you again for coming, and I wish you safe travels home.


Modified: 11/05/2011