SEC Set Records for Enforcement Actions, Penalties and Disgorgements in 2015
Last week, SEC Chair Mary Jo White testified before the U.S. Senate Committee on Banking, Housing, and Urban Affairs. Several of Ms. White's comments may be of interest to potential SEC whistleblowers.
1.Testimony: SEC Sets Records in 2015
According to Ms. White, “The SEC filed a record 807 enforcement actions in FY 2015 covering a wide range of misconduct, and obtained orders totaling $4.19 billion in disgorgement and penalties, both at record levels.” (Testimony, p. 5.)
Ms. White further testified that “Each of the last three years has been marked by vigorous enforcement and examination programs, empowered with new tools and methods to detect and hold wrongdoers accountable and protect investors.” (Testimony, p. 1.)
As I reported previously, during that same testimony, Ms. White also praised the SEC Whistleblower Award Program as having had “a transformative impact on our enforcement program.”
2. Testimony: Key Areas for SEC Enforcement
One question that potential SEC whistleblowers often wonder is whether the SEC will be interested in the wrongdoing they have uncovered.
During her testimony, Ms. White identified several “key areas” that the SEC continues to focus on. One area that Ms. White called “critical” is “financial reporting and issuer disclosure.” According to Ms. White:
Comprehensive, accurate, and reliable financial reporting is the bedrock upon which our markets are based, and is essential to ensuring public confidence in them. And at my direction, since 2013, our Enforcement Division has intensified its focus on pursuing violations in this area. Part of this effort involved creating a dedicated group of accountants, attorneys, and analysts who use cutting edge data analytical tools to look for evidence of reporting discrepancies and other early warning signs of financial reporting fraud. (Testimony, p. 6.)
Another “key area of enforcement” that Ms. White addressed is investment management:
… the SEC has continued to bring actions addressing a widening range of issues, including performance advertising, undisclosed conflicts of interest, compliance issues, and private equity fees and expenses. Among these are “first-of-their-kind” actions for failures to report material compliance matters to fund boards and the improper allocation of expenses by private equity advisers. The Enforcement Division’s focus on private equity has expanded significantly over the past few years … (Testimony, p. 6.)
Other areas that Ms. White identified during her testimony included:
- high frequency trading
- the operation of trading platforms such as dark pools
- manipulative trading
- misusing confidential customer trading information
- market access
- technology controls, and
- net capital violations
(Testimony, p. 6.)
3. What Else does the SEC Investigate?
In an earlier post, I wrote about anti-money laundering charges that the SEC recently brought against a Wall Street brokerage firm for “failing to sufficiently evaluate or monitor customers’ trading for suspicious activity” by failing to file Suspicious Activity Reports (SARs). Some other things that the SEC can and does investigate include:
- Accounting frauds
- Books and Records violations
- Financial Statement frauds
- Initial Public Offering frauds (IPOs)
- FCPA violations (bribery or improper payments made to foreign officials)
- Deceptive practices in buying or selling stocks
- Municipal Securities frauds
- and more
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About the Pickholz Law Offices LLC
The Pickholz Law Offices LLC is a law firm that focuses on representing clients involved with investigations conducted by the U.S. Securities and Exchange Commission, FINRA, and other securities regulators.
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