The United States Securities and Exchange Commission announced on Tuesday its enforcement results for its fiscal year 2022, noting that it recovered $6.439 billion in civil penalties, disgorgement and pre-judgment interest during the period.
The amount, which shot up 67% from $3.852 billion recovered in 2021, is “the most on record in SEC history,” the securities regulator said, adding that the funds were recovered from a total of 760 enforcement actions filed during the fiscal year. The number presents a 9% year-over-year (YoY) increase, the SEC said.
Giving a further breakdown, the SEC noted that the majority, that is, 61% or 462 of the enforcement actions were new or ‘stand-alone’ actions, and 17% or 129 actions were related to actions taken “against issuers who were allegedly delinquent in making required filings with the SEC.”
Furthermore, almost a quarter, that is 22% or 169 enforcement actions, were related to "‘follow-on’ administrative proceedings seeking to bar or suspend individuals from certain functions in the securities markets based on criminal convictions, civil injunctions, or other orders.”
In terms of monetary value, the SEC said civil penalties accounted for 65% or $4.194 billion of the recovered funds and these "were also the highest on record." Moreover, while the regulator disclosed that funds recovered from disgorgement-related enforcement actions accounted for 35% or $2.245 billion of the total amount gotten at the end of the fiscal year 2022, this category of fund dropped -6% YoY during the year.
Record Whistleblower Award
Meanwhile, the SEC said it saw a record number of whistleblower awards in the fiscal year 2022. “In the fiscal year 2022, the SEC issued approximately $229 million in 103 awards, making it the SEC’s second highest year in terms of dollar amounts and number of awards," the SEC noted. "The Whistleblower Program also received a record-high number of whistleblower tips alleging wrongdoing—more than 12,300 whistleblower tips—in the fiscal year 2022,” the regulator added.
Speaking on the recovered funds, Gurbir Grewal, the Director of the SEC Division of Enforcement, noted that the regulator is not expecting to break these records and set new ones every year because it expects behavior to change. “We expect compliance,” Grewal added.
Also speaking, the SEC Chair, Gary Gensler, noted that he remains impressed with the Division of Enforcement. "These numbers, though, tell only part of the story. Enforcement results change from year to year. What stays the same is the staff’s commitment to follow the facts wherever they lead," Gensler explained.
Categories of the Enforcement Actions
According to the SEC, its enforcement actions in the fiscal year 2022 cut across “a wide variety of violations and violators in the securities market.” These include actions against financial fraud and issuer disclosure, actions against industry gatekeepers, such as auditors, lawyers, and transfer agents, and those against violators in the crypto asset securities industry.
Others are related to cybersecurity and compliance as well as environmental, social, and governance (ESG) concerns such as the charge against BNY Mellon Investment Adviser. Furthermore, the SEC's action covers assets managed by private funds such as the case against Allianz Global Investors; or charges against regulated entities such as broker-dealers. In May, the Commission fined TradeZero America, Inc. $100kfor meme stock deception.
Additionally, the SEC's enforcement actions cover market abuses, for instance, the regulator’s action against a former member of the US Congress for alleged insider trading. On top of that, the SEC enforces against actions the misuse of complex products and strategies, such as the case against Archegos Capital Management, LP.
Also, the regulator fights against public financial abuse or violation of the Foreign Corrupt Practices Act. For instance, in September, the regulator asked Oracle Corporation to pay $23 million to settle bribery charges against some of its Asian Subsidiaries.
