Journal of Investment Compliance

Purpose – The purpose of the paper is to summarize key provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act Affecting SEC and CFTC Enforcement.

Design/methodology/approach – The paper summarizes provisions on new SEC causes of action, including greater power to bring aiding-and-abetting claims and authorization to bring cases based on “control person” liability; other new SEC powers, including broader monetary penalty authority in administrative proceedings, a collateral bar that bars a person from any part of the securities business, codification of the SEC's extraterritorial enforcement jurisdiction, and expansion of nationwide service of process to federal court cases; monetary incentives and protections for whistleblowers; increased SEC funding; and CFTC enforcement powers, including a fraud liability provision, expanded liability for manipulation or providing false or misleading information, prohibition of various practices, authority to establish business conduct requirements, nationwide subpoena power, and the ability to seek various sanctions.

Findings – Dodd-Frank has ramped up the enforcement mandates of the SEC and the CFTC more than at any time since the agencies were created. Their jurisdictional reach is broader, the causes of action they can bring have increased, and the remedies have expanded.

Practical implications – Public companies, regulated entities, and hedge funds, as well as their officers, directors, and employees, should brace themselves and prepare for a significant increase in enforcement activity by both the SEC and the CFTC.

Originality/value – The paper provides expert guidance from experienced financial services lawyers.