Securities and Exchange Commission Historical Society

The Enforcement Division: A History

1989 - 2008

Enforcement in the Municipal Securities Market

The Division also branched into new areas. For much of its history the SEC did not regulate municipal securities (though the antifraud rules applied to their purchase and sale). In the 1970s and 1980s it was given some authority over that market due to several well-publicized defaults and near-defaults,(1) but only in the 1990s did municipal securities became a major issue for the staff, driven by Levitt’s and Congress’s opposition to “pay to play” practices in which securities intermediaries gave donations to municipal officials in exchange for their business, and by the highly publicized bankruptcy of Orange County, California following massive purchases of risky financial instruments.(2) In the early 1990s, the Division “brought more than 100 enforcement actions against municipal market participants for deficient disclosure practices.”(3)

Orange County Flag
Orange County Flag

Organizational changes also led the Division to greater oversight of all enforcement matters. After the creation of the Division in 1972, the regional offices continued active enforcement programs; indeed, the number of enforcement attorneys in the regional offices outstripped those in the main office.(4) While the offices loosely coordinated with headquarters, in the early 1990s recommendations from the regional offices began to be channeled through the Division Chief Counsel’s office before being submitted to the Commission, in a move that produced some friction between the Division and regional offices but also greater coordination of enforcement efforts and policies.(5)

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(1) Seligman: 639.

(2) Seligman 639-44; Frank Partnoy, Infectious Greed: How Deceit and Risk Corrupted the Financial Markets: 114-21 (2009).

(3) Seligman: 640.

(4) Joan McKown oral history.

(5) Colleen Mahoney oral history.

Related Museum Resources

Oral Histories

08 May 2008

Ralph Ferrara

20 June 2013

Arthur Levitt

September 26, 2019

Colleen Mahoney

Video: 1:05:25

Colleen Mahoney spent 15 years in increasingly senior positions with the SEC. In 1983, she joined the SEC’s Office of General Counsel. She then moved to the Division of Enforcement in 1990, serving as chief counsel. After a stint as executive assistant/chief of staff for Chairman Arthur Levitt in 1993-94, Ms. Mahoney went back to the division of enforcement as deputy director under Bill McLucas until 1998. During the course of her SEC career, she saw internet technology begin to change internal processes, derivatives begin to proliferate, and the SEC make major structural changes to adapt to a more globalized marketplace. In her last several months before leaving for the private sector, she served as acting general counsel for the agency.

February 8, 2019

Joan McKown

Video: 1:25:12

Joan E. McKown spent nearly 25 years at the SEC, 1986 to 2010, the last 17 as chief counsel in the Enforcement Division. During her tenure in the Division, she honed her knowledge of investigatory issues relating to financial fraud, corporate disclosure, corporate governance, accounting, compliance, private equity, FCPA, broker dealer, investment adviser, investment companies, and insider trading. She also played a key role in establishing enforcement policies and oversaw creation of the first version of the SEC Enforcement Manual.

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