SEC Brought More Advisor, BD Enforcement Actions in 2018

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.