Corporate watchdog fouled its data-separation regime and let the wrong people read sensitive docs
The US Securities and Exchange Commission has dismissed proceedings against 42 companies and individuals after admitting that its enforcement staff accessed documents that were supposed to be for judges' eyes only.[PDF] of the now-dismissed cases were slated to be heard by the watchdog agency's in-house court – which is supposed to remain strictly separate from the SEC's enforcement staff.
"The 'Chinese Wall' between adjudication and enforcement is a sacrosanct tenet of the SEC and of internal control policy,"Digital Brand Media and Marketing Group , one of the 42 entities involved, in a press release about the dismissals. The decision follows a review of enforcement staff's access to records. That effort commenced in April 2022 after the SEC disclosed two earlier cases in which"agency enforcement staff had access to certain adjudicatory memoranda," in a way that broke legal rules.
The improper access saw the enforcement side of the SEC download databases they weren't supposed to be able to see, before sending memos to other staff members who also barred from seeing those documents - among them"attorneys investigating and prosecuting the enforcement matters," according to the SEC's April 2022In the investigation that followed, during which the watchdog agency brought in external consultants Berkeley Research Group, the review team found that the data...
"We deeply regret that the agency's internal systems lacked sufficient safeguards surrounding access to Adjudication memoranda, and we are continuing our work to ensure that, going forward, work product from the Adjudication staff is appropriately safeguarded," the Friday
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