SEC Publicizes Enforcement Results For FY 2015

Posted On Tuesday, November 24, 2015

On October 22, 2015, the Securities and Exchange Commission (“SEC”) announced its enforcement results for Fiscal Year (“FY”) 2015. The agency filed 807 enforcement actions, including a record 507 independent actions for violations of federal securities law, and recovered approximately $4.18 billion in disgorgement and penalties. The number of independent enforcement actions represents a 22% increase over the number of such actions filed in FY 2014 (413) and a 49% increase over those filed in FY 2013 (341).  

The agency has yet to release its Select SEC and Market Data, the report that will breakdown the quantity and types of enforcement actions pursued.  However, the overview contained in the October 22 announcement provides some insight into the agency’s foci for the past year, and likely going forward. 

Taking action against individuals – A theme throughout the overview is the SEC’s enforcement efforts against alleged individual wrongdoers. It touts its aggressive pursuit of insider traders and its actions against attorneys, accountants, and other “gatekeepers” for failing to comply with professional standards in advising clients. Indeed, in each category of enforcement action it highlights, the SEC notes actions brought against – and, in many instances, recovery from – individuals.

The overview’s focus on enforcement against individuals aligns with recent public statements from SEC officials.  In May 2015 remarks, for example, Director of Enforcement, Andrew Ceresney, emphasized that companies attempting to cooperate with an SEC investigation were expected to share facts implicating individual wrongdoers, if such facts exist.  Accordingly, it is clear that the SEC has joined the Department of Justice in shifting its investigative focus and enforcement efforts to hold individual – and not just corporate – wrongdoers responsible, and to require corporations seeking resolution to cooperate in those efforts.     

Using data and analytics innovatively – Although it does not get into specifics, the SEC touts its cutting-edge use of data and analytics to spot suspicious practices and “crack” complex insider trading rings. The reference to data and analytics no doubt serves a signaling function to would-be insider traders: the agency is technologically fluent and equipped to investigate in the modern world. 

Combating foreign corrupt practices – The SEC highlights its enforcement of the Foreign Corrupt Practices Act (“FCPA”), 15 U.S.C. § 78dd-1 et seq.  In particular, it notes filing a “first-ever” FCPA action against a financial institution, which is also the “first-ever” case to allege hiring practices in violation of the statute.  The SEC’s efforts to emphasize the innovative nature of its FCPA actions indicates that it will wield the statute aggressively, a message that the agency has also sent in its public statements throughout FY 2015.

Rewarding whistleblowers – The SEC awarded approximately $38 million through its whistleblower program in FY 2015.  Eight whistleblowers received awards, with one earning $30 million, the largest payment made by the program to date. Because of that enormous award, the program paid far more to whistleblowers in FY 2015 than it has in any year since its inception in August 2011. The SEC’s report to Congress on the whistleblower program can be found here.