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Two recent U.S. Securities and Exchange Commission enforcement actions have raised concerns that the agency will penalize compliance officers who create rigorous programs, leading to potentially perverse incentives to avoid responsibility for those programs, the Wall Street Journal reported today. The SEC charged the chief compliance officer at Blackrock Advisors LLC officer with breaches of the Investment Advisers Act for failing to implement certain compliance compliance policies and procedures. The compliance officer agreed to pay a $60,000 penalty; the company will pay $12 million. Neither admitted nor denied the SEC’s allegations. The agency also charged the chief compliance officer of SFX Financial Advisory Management Enterprises Inc. with failing to implement compliance policies and procedures it says would have detected an alleged fraud by an executive at the firm. The company was fined $150,000 and the compliance officer agreed to pay a $25,000 penalty as part of a settlement agreement in which neither had to admit nor deny guilt.

The Securities and Exchange Commission is fending off a flurry of legal challenges to its in-house court system, which has become a key cog in its enforcement strategy but has drawn mounting criticism, the Wall Street Journal reported today. The agency is deploying a variety of countermeasures to fight at least seven cases brought by defendants around the country. The expanding effort prompted one federal judge last week to say the agency appears to be in “a little bit of chaos right now.” The cases are forcing the SEC to defend the growing use of its five administrative-law judges, to whom it sends hundreds of cases a year. The agency has been directing more cases to its internal courts since the Dodd-Frank financial-reform law granted it more latitude to do so. The SEC says the system is faster and more efficient than federal courts. Critics have said the process unfairly denies defendants important protections afforded by the federal courts. A federal judge in Atlanta this month said in a ruling that the SEC in-house tribunal was “likely unconstitutional.” She ordered a temporary halt to the SEC case under review, ahead of a final decision on whether to block it permanently.

New Securities and Exchange Commission rules going to effect today will allow small investors to participate in equity crowdfunding, in which startups can raise up to $50 million through online campaigns, the Wall Street Journal reported today. The rules, called Regulation A+, authorize an existing provision of the 2012 Jumpstart Our Business Startups Act (JOBS Act), which set out to ease securities laws on equity crowdfunding and other fundraising tools for new ventures. Until now, that law has limited to accredited investors — those who earn over $200,000 a year or have a net worth of at least $1 million — the ability to buy shares through crowdfunding campaigns. The new rules are “democratizing something that historically only institutions and the high net worth had access to,” said Kiran Lingam, general counsel at SeedInvest, a crowdfunding platform. Beginning in September 2013, more than 1,700 companies have raised over $700 million through equity crowdfunding, according to Crowdnetic, a firm that tracks about 18 of the industry’s most popular crowdfunding sites. In the three months ended March 31, accredited investors committed $161 million to startups through those sites, more than three times the amount from the same quarter a year ago. There are roughly 80 crowdfunding sites but many are largely inactive, according to Crowdnetic.

The Securities and Exchange Commission charged 36 municipal underwriting firms, including units of Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co., with making false statements or omissions in bond documents, the first penalties for underwriters under the agency’s voluntary self-reporting program targeting inaccuracies in those documents, the Wall Street Journal reported today. Between 2010 and 2014, the firms violated federal law by selling municipal bonds with offering documents that “contained materially false statements or omissions about the bond issuers’ compliance with continuing disclosure obligations,” the SEC said in a news release Thursday. The firms also failed to conduct due diligence to identify those inaccurate statements or omissions before selling the bonds, the agency said. The 36 firms settled the cases for a combined total of around $9 million, without admitting or denying the findings, and agreed to cease and desist from such actions in the future, the SEC said.

Revised rules set to take effect on Friday will make it easier for some U.S. and Canadian companies to sell securities with reduced fees, limited regulatory reporting and less legal liability, the Wall Street Journal reported today. The U.S. Securities and Exchange Commission’s updated Regulation A rules will allow U.S. and Canadian companies that are not SEC reporting issuers to sell up to $50 million of their U.S. securities annually, and will permit their shareholders to sell up to $15 million in any 12-month period, with immediate public trading in the U.S. of the purchased securities. The previous version of the rules had set the cap at $5 million, which made it infrequently used, said Spencer Feldman, a partner at law firm Olshan Frome Wolosky LLP. The changes make it easier for smaller issuers to access capital on U.S. trading markets, and will offer lower initial and ongoing expenses, reduced legal liability, potentially higher valuations, limited SEC reporting and no ongoing Sarbanes-Oxley compliance, said Guy Lander, a partner at law firm Carter Ledyard & Milburn.

A federal judge ruled yesterday that the Securities and Exchange Commission’s use of an in-house judge to preside over an insider-trading case was “likely unconstitutional,” a potential blow to the agency’s controversial use of its internal tribunal, the Wall Street Journal reported today. The decision possibly creates a serious headache for the SEC, which is increasingly using its five administrative-law judges to hear its cases, rather than sending them to federal court, legal experts said. Although the ruling was preliminary, and won’t necessarily be duplicated in other federal courts, it could have ramifications for other SEC cases and potentially other federal agencies. In a ruling in Atlanta, U.S. District Judge Leigh Martin May agreed yesterday to temporarily halt an insider-trading administrative case against Charles Hill, pending her final decision on his argument that the SEC’s use of the forum is unconstitutional.

U.S. companies whose financial statements contain errors may soon have to “claw back” some of their top executives’ compensation as a result, the Wall Street Journal reported today. The Securities and Exchange Commission will soon propose long-awaited rules forcing companies to claw back, or revoke, some of their top officials’ incentive pay if they have to restate the financial results that led to it. Unlike existing rules, in which clawbacks are triggered only in a narrow set of circumstances involving misconduct at companies that restate earnings, the SEC’s proposal would apply to all manner of restatements — including those issued because of mistakes. The rules, if finalized, could force an executive who received stock options after the company met a performance target, such as a revenue figure, to return some or all of that compensation if a misstatement shows revenue fell below the executive’s performance target.