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SEC Hit Advisors With Record Enforcement Actions in FY ’16

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Investment advisors were hit with a record number of enforcement actions by the Securities and Exchange Commission in FY 2016.

In the fiscal year, which ended Sept. 30, the SEC filed 868 enforcement actions, which included a new single-year high in actions involving investment advisors or investment companies (160 actions) and the “most ever” independent or standalone cases involving investment advisors or investment companies (98 actions), according to data released by the agency Tuesday.

New enforcement action highs were also seen for violations of the Foreign Corrupt Practices Act, with 21 actions. Money distributed to whistleblowers hit a single year milestone with $57 million in rewards. 

The agency also said it brought a record 548 standalone or independent enforcement actions and obtained judgments and orders totaling more than $4 billion in disgorgement and penalties. 

“By every measure, the enforcement program continues to be a resounding success holding executives, companies and market participants accountable for their illegal actions,” said SEC Chairwoman Mary Jo White, in a statement. “Over the last three years, we have changed the way we do business on the enforcement front by using new data analytics to uncover fraud, enhancing our ability to litigate tough cases, and expanding the playbook bringing novel and significant actions to better protect investors and our markets.”

Notable actions against advisors and investment companies include the eight enforcement actions related to private equity advisors, including cases against:

• Three private equity fund advisers within The Blackstone Group.

• Fenway Partners, LLC and four of its employees.

• Cherokee Investment Partners, LLC and Cherokee Advisers, LLC.

• JH Partners, LLC.

• Blackstreet Capital Management, LLC and its managing member and principal owner.

• WL Ross & Co. LLC.

• Four private equity fund advisers affiliated with Apollo Global Management.

• First Reserve Management, L.P. 

Including these actions, the SEC said it has now brought eleven private equity-related actions in the last two years.

The agency also charged Aequitas Management LLC, four affiliates, and three of the firm’s top executives, with allegedly hiding the rapidly deteriorating financial condition of its enterprise while raising more than $350 million from more than 1,500 investors.

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