George Canellos, co-chief of the U.S. Securities and ExchangeCommission's enforcement division, said investigators are turningtheir focus to enforcing new regulations from the 2010 Dodd FrankAct.

“You'll see a lot of our cases geared toward showing that whennew regulations are written that people must comply with them,”said Canellos, who was speaking today on a panel at a PractisingLaw Institute event in New York. Enforcers play a “criticallyimportant” role in shaping new rules, he said.

Canellos, who highlighted new regulations aimed to bringtransparency to the derivatives market, said investigators arepursuing issues such as the role of fiduciaries who are responsiblefor setting up internal safeguards against fraud and improper risktaking. The shift in focus comes as the agency wraps up caseslinked to the credit market turmoil of 2008, he said.

Investigators are also trying to harness technology to drivemore data-driven cases, Canellos said. The agency is looking forevidence of companies distorting their earnings reports bycomparing past performance records against analyst estimates. Aconsistently close correlation could indicate fraud, he said.

Canellos also said the agency will take “less of aone-size-fits-all” approach to its cases, highlighting the “richvariety of misconduct” that probes reveal.

“We shouldn't be applying formulaic approaches to cases thatobscure critical differences that exist,” he said.

Bloomberg News

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