By Majda Muhic, Fall 2016 Student Intern
In fiscal year 2016, which ended September 30, the Securities and Exchange Commission reached record highs in its enforcement activities as it successfully held individual executives, companies and, market participants, including a municipality, accountable for a range of illegal conduct. The agency’s enforcement goals are wide-reaching and clear: protecting investors and ensuring fair and reliable markets for all.
The numbers of filed actions speak for themselves: in just one year, the SEC filed a record high of 868 actions exposing financial reporting-related misconduct and misconduct by registrants and gatekeepers; 160 of these involved investment advisers and investment companies – another record to date. The financial results of the agency’s enforcement activities also speak for themselves: the agency recovered $4 billion in disgorgement and penalties, intended not only to penalize wrongdoers for their past wrongful conduct but to deter similar misconduct in the future. The agency further rewarded whistleblowers a total of $57 million in a single year – again, SEC’s highest to date.
This fiscal year further saw a range of first-of-their kind actions, including an action against a private equity adviser for acting as an unregistered broker, and a first-of-its-kind successful ligation: the SEC won its first federal jury trial against a municipality, the city of Miami, and its former Budget Director for multiple antifraud violations of the federal securities laws for failing to disclose the city’s deteriorating financial condition during 2007 and 2008. Financial fraud and the often accompanying failure to disclose form a central concern of the SEC this year.
According to SEC Chair Mary Jo White, the agency’s enforcement success is in part due to the changes in approach of its enforcement program, including the use of new data analytics to both detect illegal activity and speed up investigations. The message is clear: the SEC is committed to protecting investors and ensuring a fair and reliable marketplace for all.
This week’s series focuses on the SEC’s 2016 enforcement efforts. For a full review of its 2016 enforcement activities and results, read more here.