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By Liana B. Baker and Michelle Price
NEW YORK/WASHINGTON (Reuters) - A high-profile settlement with Tesla Inc (TSLA.O) Chief Executive Elon Musk exemplifies a recent push by the U.S. Securities and Exchange Commission to go after executives and not just their companies, securities law experts said.
In the last week, the SEC announced charges or penalties against eight corporate officials at six companies, including Tesla. The SEC pursued each on different grounds, but securities lawyers said they highlight a shift to an emphasis on personal wrongdoing that has accelerated under Jay Clayton, an appointee of U.S. President Donald Trump who has served as SEC chairman since May 2017.
"Clayton is focused on holding individuals liable and not just corporate entities," said Mary Hansen, co-chair of the white collar defense and corporate investigations practice at Drinker Biddle, who worked in the SEC's enforcement division for eight years.
"The public wants to see our law enforcement, whether it be civil or criminal, hold those individuals responsible. That's what is driving this focus on individual liability."
The SEC brought action last week against the former president and chief financial officer of LendingClub Asset Management, Renaud Laplanche and Carrie Dolan, and the former CEO and CFO of Walgreens Boots Alliance (WBA.O), Gregory Wasson and Wade Miquelon.
In Tesla's case, the SEC fined Musk $20 million and forced him to step down as chairman to settle charges he committed securities fraud in tweets saying he was considering taking the electric carmaker private. Tesla itself was also fined $20 million.
"Holding individuals accountable is important and an effective means of deterrence," Clayton, a former corporate lawyer at law firm Sullivan & Cromwell LLP, said in statement on Saturday. Some Democratic lawmakers had expressed concerns during Clayton's confirmation process that his ties to Wall Street would create conflicts and weaken oversight.
In 2016, 73 percent of the SEC's standalone actions involved charges against one or more individuals, according to its own data. That rose to 80 percent in the six months after Clayton took over.
CALLS FOR INDIVIDUAL PROSECUTIONS
The SEC's focus on personal culpability has roots in the aftermath of the 2007-2009 financial crisis. Few Wall Street executives were criminally prosecuted for their involvement, triggering calls by lawmakers and the media to hold more individuals accountable for corporate wrongdoing.
Proving individual wrongdoing and malicious intent is more difficult and resource-intensive than identifying compliance lapses at companies, legal experts said, explaining the SEC's previous reluctance to pursue such cases.