New SEC enforcement chiefs see cyber crime as biggest market threat

Hackers are increasingly breaking into brokerage accounts to steal assets or make illegal trades, prompting U.S. securities regulators to start tracking cyber crimes more closely, two newly appointed enforcement officials said in an interview on Thursday.

On Thursday, the U.S. Securities and Exchange Commission named Stephanie Avakian and Steven Peikin as new co-directors of enforcement.

In an exclusive interview ahead of the formal announcement, the two said they were deeply concerned about cyber threats and see the topic as a major enforcement priority.

“The greatest threat to our markets right now is the cyber threat,” said Peikin, who was still wearing a guest badge because he has not yet received his formal SEC credentials yet. “That crosses not just this building, but all over the country.”

The SEC has started to see an “uptick” in the number of investigations involving cyber crime, as well as an increase in reports of brokerage account intrusions, Avakian said. As a result, the agency has started gathering statistics about cyber crimes to spot broader market-wide issues.

The kinds of cyber crimes the SEC has been noticing range from stealing information for the purpose of insider trading, to breaking into accounts to either steal assets, trade against them or manipulate markets.

Last year, for instance, the SEC accused a U.K.-based man with hacking into numerous accounts, placing unauthorized trades and then profiting by trading the same stocks in his own personal account.

“I think we will see the cyber threat continue to emerge,” Avakian said.

Avakian has been serving as acting director of enforcement since December. It is her second stint at the agency, having rejoined in 2014 after working in private practice at the law firm Wilmer Cutler Pickering Hale and Dorr.

Peikin, a former federal prosecutor, will join the SEC on June 26 from Sullivan & Cromwell, a law firm where newly appointed SEC Chairman Jay Clayton also worked.

He has represented Goldman Sachs Group Inc (GS.N) and Barclays PLC (BARC.L), as well as Michael Coscia, the first person to be criminally convicted under a new law that aims to prevent traders from “spoofing” the market by putting in bids with the intent to cancel them.

The dual enforcement role can help prevent problems by allowing officials to recuse themselves when conflicts or the appearance of conflicts of interest exist.

During Clayton’s confirmation hearing, some lawmakers raised concerns that his prior work at Sullivan & Cromwell could lead him to go easy on Wall Street or create too many recusals that cause the commissioners to deadlock on cases.

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Source: Reuters