By Reynolds Holding
NEW YORK, Jan 30 (Reuters Breakingviews) - The Securities
and Exchange Commission could use a few tips from America's
workplace watchdog. The Equal Employment Opportunity Commission
filed far fewer claims last year than in 2011 but won a record
$365 million in penalties and damages. That's a testament to
basing enforcement on solid cases with broad impact. The SEC,
meanwhile, boasts of quantity but seems to be giving quality -
and perhaps deterrence - short shrift.
The EEOC spent decades pursuing employment-discrimination
complaints almost exclusively on behalf of individuals. But
tight budgets and flubbed cases forced a change. In 2006, the
commission began filing more of what it calls systemic cases,
which challenge company or industry-wide practices. The number
of total claims dropped by more than half, but amounts won
The SEC, by contrast, has generally brought more enforcement
actions each year since 2006, hitting a record high of 735 in
2011 and filing 734 last year. That's not surprising in the
aftermath of a financial crisis, but the amounts recovered
haven't kept pace. In 2012, the regulator collected a little
more than $1 billion compared with almost $1.8 billion in 2010.
The type and quality of the cases have also drawn criticism.
There have been more insider trading actions since 2009, for
instance, than during any other three-year period in SEC
history. But those cases don't address market abuses at the
heart of the financial meltdown.
Meanwhile, crisis-related actions like the $550 million
Goldman Sachs settlement over the Abacus deal have
generally focused on single transactions rather than patterns of
wrongdoing. The securities watchdog has also lost several
high-profile cases at trial.
Of course, the SEC and the EEOC have different agendas and
powers. The financial regulator is more of a policeman, because
investors can't pursue securities law violations as easily as
employees can sue over workplace discrimination. And filing more
but smaller cases might be able to promote deterrence if it were
to increase the chances of getting caught.
The EEOC's approach, however, seems the better bet. Big
penalties can get the attention of even the largest companies.
And with austerity looming in Washington, every federal agency
will need to learn how to get a bigger bang for its buck.
- The U.S. Equal Employment Opportunity Commission recovered
a record $365.4 million through discrimination claims last year
while filing only 122 cases, down from 261 in 2011, according to
a report issued on Jan. 29 by law firm Seyfarth Shaw. The higher
recoveries are the result of the commission's pursuit of broader
cases targeting industries, occupations and geographic areas,
the report said.
- Meanwhile, the Securities and Exchange Commission filed
734 enforcement actions last year, one fewer than the record 735
filed in 2011.
(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own)
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