The Securities and Exchange Commission (SEC) announced recently that they have continued to increase their focus on enforcing the rules for securities industry professionals with a significant number of first-of-their-kind, high-impact cases and a record number of total actions in the 2015 fiscal year, which ended September 30.
For fiscal year 2015 (FY 2015), the SEC filed 807 enforcement actions covering a wide range of misconduct and obtained orders totaling approximately $4.2 billion in disgorgement and penalties, compared to 755 enforcement actions and disgorgement and penalty orders totaling $4.16 billion in fiscal year 2014. This continues the upward trend from 2013 fiscal year numbers (676 actions and $3.4 billion in penalty orders) and fiscal year 2012 ($3.1 billion in penalty orders).
Of the 807 enforcement actions filed in FY 2015, a record 507 were independent actions for violations of the federal securities laws (up 23% from the previous year) and 300 were either actions against issuers who were delinquent in filing required reports with the SEC or administrative proceedings seeking to bar licensed individuals based on criminal convictions, civil injunctions, or other orders.
Key Enforcement Actions
With numerous unique cases this fiscal year, including one against a “Big Three” credit rating agency, an admissions settlement with an auditing firm, and an underwriter involved in pricing-related fraud for municipal securities, the SEC’s key enforcement priorities and specific actions taken included:
- Combating financial fraud and enhancing issuer disclosure by meticulous review of financial reporting and enforcing penalties against companies and executives
- Holding gatekeepers, such as attorneys, accountants, and others accountable for failures to comply with professional standards
- Ensuring exchanges, traders, and other market participants operate fairly
- Rooting out insider and abusive trading schemes, including charging multiple parties involved in insider trading rings and discovering an alleged scheme to profit from hacked corporate earnings information
- Uncovering misconduct by investment advisers and investment companies
- Fighting market manipulation and microcap fraud (fraud involving stocks that are not traded on the stock exchanges)
- Halting international and affinity-based investment frauds, including those that targeted immigrant communities and other vulnerable groups
- Cracking down on misconduct involving complex financial instruments
- Combating foreign corrupt practices
- Standing up for eight whistleblowers by awarding a total of approximately $38 million
- Demanding admissions in important cases enhancing public accountability
- Successful litigation, including a win in all six U.S. District Court trials and good success in administrative proceedings
The SEC’s Enforcement Division accomplished this by leveraging data, quantitative analytics, and the expertise of multiple divisions within the agency. The SEC hopes their vigorous and comprehensive enforcement sends a clear message to potential financial criminals and encourages integrity and transparency in the industry while holding executives and companies accountable for any wrongdoing. This will serve to protect all investors and give them reassurance about our financial markets and the safety of their investments from fraud.
It’s evident the SEC will continue to crack down on those who sell and trade securities to ensure they treat investors fairly and comply with safeguards designed to protect investors, If you would like more information, JLK Rosenberger is here to help. Call us at 949-860-9902 or click here to contact us. We look forward to speaking with you soon!