The Securities and Exchange Commission (SEC) recently announced its Enforcement Results from the year, which included 784 enforcement actions, nearly $5 billion in financial remedies, and nearly $1 billion in distributed funds to harmed investors.
Specifically, the SEC obtained orders for $4.949 billion in financial remedies, the second highest amount in SEC history, after the record-setting financial remedies ordered in fiscal year 2022. The financial remedies comprised $3.369 billion in disgorgement and prejudgment interest and $1.580 billion in civil penalties. Both the disgorgement and civil penalties ordered were the second highest amounts on record.
The SEC also obtained orders barring 133 individuals from serving as officers and directors of public companies, the highest number of officer and director bars obtained in a decade.
Whistleblower Program has Record-Breaking Year
Fiscal year 2023 was a record-breaking year for the SEC’s Whistleblower Program. The SEC issued whistleblower awards totaling nearly $600 million, the most ever awarded in one year, including a record-breaking $279 million awarded to one whistleblower. The Commission received more than 18,000 whistleblower tips in fiscal year 2023, a record number and approximately 50 percent more than the then-record 12,300 whistleblower tips received in fiscal year 2022. The SEC received more than 40,000 tips, complaints, and referrals in total, a 13 percent increase over fiscal year 2022.
Initiatives the SEC Focused on in FY23
In fiscal year 2023, the Division conducted a number of initiatives to proactively investigate recurring or widespread violations in the securities industry, which included regulating entities’ recordkeeping requirements, other initiatives by the SEC included:
- Investigating noncompliance with the Marketing Rule;
- focusing on ownership reports that company insiders are required to file regarding their holdings of company stock;
- selling securities that allegedly did not comply with Regulation A; and
- addressing misconduct that prevents effective oversight of the securities industry (such as the Off-channel Communications Initiative discussed above and their reporting obligations to regulators).
SEC Prioritizes Accountability of Individuals
Individual accountability remains a pillar of the SEC’s enforcement program. In fiscal year 2023, approximately two-thirds of the SEC’s cases involved charges against one or more individuals. In addition, to protect investors from future violations, the SEC obtained 133 orders barring individuals from serving as officers and directors of public companies, the highest number in a decade.
Other Notable Enforcement Trends/Actions
Additional high-profile cases and enforcement trends centered around:
- Affinity Frauds and Ponzi Schemes;
- Public company misstatements, such as accounting misstatements, and deficient controls;
- Gatekeepers and ensuring they comply with their obligations;
- abusive trading practices, such as insider trading, front-running, and market manipulation;
- Crypto, including billion-dollar crypto fraud schemes, unregistered crypto asset offerings, platforms, and intermediaries, and illegal celebrity touting;
- Cybersecurity, such as disclosing material risks and incidents;
- ESG-Related Cases;
- Public Finance Abuse;
- Investment Professional Abuse; and
- Foreign Corrupt Practices Act (FCPA) Actions.
To read the full SEC press release, “SEC Announces Enforcement Results for Fiscal Year 2023,” click here.