SEC enforcement reaches record heights

Enforcement activity by the U.S. Securities and Exchange Commission surged to record levels in fiscal 2022, according to the regulator’s latest enforcement report.

The SEC reported that the number of enforcement actions filed in its latest fiscal year (ended Sept. 30) rose by 9% from the previous year to 760. This included 462 standalone enforcement cases (a 6.5% increase), 129 cases against issuers that were delinquent in their regulatory filings, and 169 cases to ban individuals based on other criminal and civil sanctions.

Accompanying the increase in enforcement activity, the financial sanctions ordered by the commission also rose.

The SEC ordered more than US$6.4 billion in penalties, disgorgement and pre-judgment interest in fiscal 2022. Total sanctions were up sharply from US$3.85 billion in fiscal 2021, and represent a record for the SEC.

While disgorgement was down by 6% from the previous year, the US$4.2 billion in penalties ordered by the commission was also an SEC record.

“As reflected in these results, the enforcement division is working with a sense of urgency to protect investors, hold wrongdoers accountable and deter future misconduct in our financial markets,” said Gurbir Grewal, director of the SEC’s division of enforcement, in a release.

“While we set a commission record this past fiscal year for total money ordered at US$6.4 billion, including a record US$4.2 billion in penalties, we don’t expect to break these records and set new ones each year because we expect behaviours to change. We expect compliance,” Grewal said.

The report also noted that the SEC issued US$229 million in 103 whistleblower awards in fiscal 2022, which represented the second-highest total in both the number and value of awards.

This came against the backdrop of a record number of whistleblower tips, more than 12,300 in fiscal 2022.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.