SEC Enforcement Division Continues to Show Results in Safeguarding Investors and Markets

November 15, 2012

The announced that it filed 734 enforcement actions in the fiscal year that ended September 30, 2012, one shy of last year’s record of 735.  Most significantly, that number included an increasing number of cases involving highly complex products, transactions, and practices, including those related to the financial crisis, trading platforms and market structure, and insider trading by market professionals. 

The SEC also announced that it obtained orders in fiscal year 2012 requiring the payment of more than $3 billion in penalties and disgorgement for the benefit of harmed investors.  It represents an 11% increase over the amount ordered last year.  In the past two years, the SEC has obtained orders for $5.9 billion in penalties and disgorgement.

The sustained high-level performance comes two years after the Division underwent its most significant reorganization since it was established in the early 1970s.  According to the SEC, the results in 2012 were aided by many of the reforms and innovations put in place in the past two years, such as increased expertise in complex and emerging financial markets, products, and transactions, including through enhanced training, the hiring of industry experts, and the creation of specialized enforcement units focused on high-priority misconduct; a flatter management structure; streamlined and centralized processes and the improved utilization of information technology; and a vastly enhanced ability to collect, process, and analyze tips and complaints.

Financial Crisis-Related Cases

Among the cases filed by the SEC in FY 2012 were 29 separate actions naming 38 individuals, including 24 CEOs, CFOs and other senior corporate officers, regarding wrongdoing related to the financial crisis.

Insider Trading Cases

Insider trading cases also are on the upswing with 58 actions filed in FY 2012 by the SEC, an increase over last year’s total of 57 actions.  The 168 total insider trading actions filed since October 2009 have been the most in SEC history for any three-year period.

  • In these actions, the SEC has charged approximately 400 individuals and entities for illegal trading totaling approximately $600 million in illicit profits. 

Investment Advisers

The SEC filed numerous actions resulting from several risk-based, proactive measures that identify threats at an early stage so that early action to halt the misconduct can be initiated and investor harm minimized.  In 2012, several actions resulted from the Division’s investment adviser compliance initiative, which looks for registered investment advisers who lack effective compliance programs designed to prevent securities laws violations.

The SEC filed 147 enforcement actions in 2012 against investment advisers and investment companies, one more than the previous year’s record number.

Issuer Disclosures

The SEC brought 79 actions in FY 2012 for financial fraud and issuer disclosure violations. 

Broker-Dealers 

The agency filed 134 enforcement actions related to broker-dealers, a 19 percent increase over the previous year. 

FCPA

The SEC filed 15 actions in FY 2012 for violations of the Foreign Corrupt Practices Act. 

Municipal Securities 

The SEC filed 17 enforcement actions related to municipal securities, more than double the number filed in 2011. 


Categories

Investment Advisers, Investment Companies