Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Regulation and Compliance > Federal Regulation > SEC

SEC Brought More Advisor, BD Enforcement Actions in 2018

Your article was successfully shared with the contacts you provided.

The Securities and Exchange Commission in fiscal 2018 brought 821 enforcement actions — 490 of which were “standalone” actions — with more actions levied against advisors and brokers than last year.

The agency also obtained judgments and orders totaling more than $3.9 billion in disgorgement and penalties, according to its FY 2018 annual report, released Friday.

Of the 821 enforcement actions:

  • 490 were “standalone” actions brought in federal court or as administrative proceedings;
  • 210 were “follow-on” proceedings seeking bars based on the outcome of commission actions or actions by criminal authorities or other regulators; and
  • 121 were proceedings to deregister public companies — typically microcap issuers — that were delinquent in their commission filings.

In fiscal 2018, standalone actions against investment advisors / investment companies totaled 108 versus 82 actions in fiscal 2017, while 63 actions were taken against broker-dealers versus 53 in fiscal 2017.

A significant number of the commission’s 490 standalone cases in fiscal 2018 concerned securities offerings (approximately 25%), investment advisory issues (approximately 22%), and issuer reporting/accounting and auditing (approximately 16%), the report states.

The commission also continued to bring actions relating to broker-dealer misconduct (13%), insider trading (10%), and market manipulation (7%).

In fiscal 2018, the agency continued to obtain significant monetary judgments against parties in enforcement actions. All told, the agency reports, parties in the commission’s actions and proceedings were ordered to pay a total of $2.506 billion in disgorgement of ill-gotten gains, a decrease over the prior year. Penalties imposed totaled $1.439 billion, an increase from the prior year.

A significant amount of the money ordered in fiscal 2018 came from a single case, the agency reported.

The agency also reported that in fiscal 2018, the Division’s Cyber Unit became fully operational.

Led by the Cyber Unit, the enforcement division ”emerged as a global leader in addressing misconduct relating to digital assets and initial coin offerings (ICOs),” the report states, adding that the division believes “our approach to enforcement in this space has been thoughtful and consistent. Importantly, it has provided a template for authorities in other countries, where fraud and misconduct targeting U.S. investors often have been based.”

Given the “explosion of ICOs over the last year,” the two enforcement directors state in the report, “we have tried to pursue cases that deliver broad messages and have market impact beyond their own four corners.”

In FY 2018, the Commission brought 20 stand alone cyber-related cases, including those cases involving ICOs and digital assets. At the end of the fiscal year, the Division had more than 225 cyber-related investigations ongoing.

“As this report demonstrates, the division’s approach to enforcement is multifaceted and outcomes-oriented with the interests of our Main Street investors front of mind,” said SEC Chairman Jay Clayton, in a statement.

“The Enforcement Division has been and continues to be extremely successful in its efforts to deter bad conduct and effectively remedy harms to investors,” Clayton said.

Steven Peikin, co-director of the SEC’s Enforcement Division, added that “this year’s report again shows a broad range of significant enforcement actions, a thoughtful approach to remedies and relief, and the return of substantial sums to investors.”

— Related on ThinkAdvisor:


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.