In 2013, Mary Jo White, a former federal prosecutor, announced that the Securities and Exchange Commission would be adopting a strategy once championed by Rudolph W. Giuliani in New York: "Broken windows," the idea that addressing relatively small issues like vandalized panes of glass can deter larger misdeeds down the road.
So over the next few years, the SEC pursued dozens of cases for small, technical transgressions with the goal of scaring off bigger infractions.
"Minor violations that are overlooked or ignored can feed bigger ones, and, perhaps more importantly, can foster a culture where laws are increasingly treated as toothless guidelines," White said at the time.
Now, data shows that during the first months of the Trump administration, the agency may be scaling back those efforts.
SEC penalties fell 15.5 per cent to US$3.5 billion ($5.09b) this fiscal year compared to 2016, according to data compiled by Georgetown University law professor Urska Velikonja.
The SEC filed 62 enforcement actions against public companies and their subsidiaries in fiscal 2017, a 33 per cent decline from the previous year, according to another study released earlier this month by the New York University Pollack Center for Law & Business and Cornerstone Research.
The reports may reflect little more than a temporary pause as leadership transitioned from White to Jay Clayton, a former Wall Street lawyer, who took over in May.
The decline also coincides with a slowdown in government hiring; the agency's enforcement division may have 100 open positions among investigators and supervisors by September, agency officials have said.
But regulatory experts worry the drop suggests a change in the relationship between regulators and the business community in the Trump administration.
"Sagging numbers signal a chilling retreat from enforcement, which was already milquetoast following the financial crash," said Bart Naylor, a financial policy advocate for the civic group Public Citizen.
"By the Enforcement division's own accounting, they are receiving reports of suspicious activity many orders of magnitude greater than what results in a sanction. Wall Street has never been an Eagle Scout alumni association, but failure by the Clayton SEC to elevate enforcement and hold individuals to severe penalties will only attract more scams."
During the Obama administration, the agency, still struggling to answer criticism that it had not done enough to hold Wall Street responsible for the financial crisis, went after high-dollar corporate fines. Some found the results lacking.
White had said the agency, for example, would force more companies to admit wrongdoing as part of their settlements with the agency. But only about 2 percent of 2,063 cases filed between 2014 through 2017 involved such admissions, according to research by David Rosenfeld, a professor at the Northern Illinois University College of Law.
Meanwhile, Clayton has indicated that he will take the agency in a different direction. For example, he has said he would prefer to avoid penalizing corporations over wrongdoing due to a single individual.
In those cases, he has argued, company shareholders are forced to pay for the misdeeds rather than the employee.
"Companies are more complicated because you can have a relatively junior person in terms of the hierarchy who is a bad actor, who you're getting rid of. And I have a hard time making shareholders pay substantially for that type of activity," he told the House Financial Services Committee last month.
At a conference last month, Steven Peikin, co-director of the SEC's enforcement division, indicated that the agency is also not enthusiastic about the SEC's previous effort to force companies to acknowledge wrongdoing. "When I heard about the admissions policy, it didn't really knock me down," he said.
Instead, Clayton has said the agency will focus on corporate wrongdoing that affects small, personal investors. It recently launched a task force to go after crimes against so-called retail investors.
"There are too many frauds for the SEC to prosecute, so the SEC has to choose," said Velikonja, the Georgetown University law professor.
"Clayton appears to be choosing to go after small players who steal a lot of money from few people, and to go easier on big players who put many people at risk of losing small amounts of money, but large in the aggregate. It's that choice that's debatable, in particular since other law enforcement agencies also go after Ponzi schemes, but fewer go after large firms.
Agency officials have said that doesn't mean the SEC will shy away from tough cases. In a recent report, the agency called 2017 a "successful and impactful year" for its enforcement division, noting that it had returned more than US$1b to harmed investors.
"I want to address one question that we have received a lot," Stephanie Avakian, co-director of the SEC enforcement division, said in a recent speech.
"That is, whether our enhanced retail focus means that we are allocating fewer resources to financial fraud and policing Wall Street. The answer to that question is simple: No. The premise that there is a trade-off between Wall Street and Main Street enforcement is a false one.