SEC Enforcement Chief Andrew Ceresney says that fiscal 2014 which ended September 30 was a “very strong year” for the division “which spanned the entire spectrum of the securities industry” and included many actions that were the “firsts of their kind actions.”
Speaking at the New York City Bar’s 4th Annual Securities Litigation and Enforcement Institute, Ceresney noted that about two-thirds of the division’s enforcement actions targeted individuals, a focus supported by former SEC Chairman Harvey Pitt, who just minutes before spoke about the importance of pursuing individual liability.
Ceresney, who noted that his comments reflected his own personal views and not the commission or its staff, said the enforcement division had pursued several priorities during the last fiscal year including oversight of investment advisors, financial reporting and accounting fraud, and market structure.
On the investment advisor front, the SEC brought actions against private equity firms KKR and Blackstone for excessive fees and expenses, using the authority over private equity funds it was granted under Dodd-Frank, Ceresney explained, noting that the KKR case was the first of its kind. The firm was charged with misallocating broken-deal expenses whereby fund investors paid the full freight of expenses involved in potential deals that were never completed and co-investors including KKR paid nothing. KKR agreed to pay nearly $30 million to settle the charges, including a $10 million penalty.
The commission also charged Blackrock for failing to disclose a conflict of interest involving an energy fund manager and several other firms and individuals for cherry picking trades — allocating the best ones for themselves ahead of their investors.
Ceresney said the SEC is also focusing on financial reporting cases, bringing 134 cases in the last fiscal year – 113 were substantive — compared to 96 the previous year when only 79 were.