SEC Announces Record Year for Enforcement Dollars, Updates PAUSE List
The U.S. Securities and Exchange Commission released its fiscal year 2024 enforcement statistics, including the announcement that the commission filed 583 total enforcement actions while obtaining orders for $8.2 billion in financial remedies – a record-setting amount for the agency.
The 583 enforcement actions represent a 26% decline in total enforcement actions compared to fiscal year 2023. Of those cases, the SEC filed 431 “stand-alone” actions, which was 14% less than in the prior fiscal year; 93 “follow-on” administrative proceedings seeking to bar or suspend individuals from certain functions in the securities markets based on criminal convictions, civil injunctions, or other orders, which was 43% less than the prior fiscal year; and 59 actions against issuers who were allegedly delinquent in making required filings with the SEC, which represented a decrease of 51%.
The $8.2 billion in financial remedies consisted of $6.1 billion in disgorgement and prejudgment interest – also the highest amount on record – and $2.1 billion in civil penalties, the second-highest amount on record. Approximately 56% of the $8.2 billion in financial remedies ordered is attributable to a monetary judgment obtained following the SEC’s jury trial win against Terraform Labs and Do Kwon, who were charged with one of the largest securities frauds in U.S. history.
“The Division of Enforcement is a steadfast cop on the beat, following the facts and the law wherever they lead to hold wrongdoers accountable,” said Gary Gensler, SEC chair. “As demonstrated by this year’s results, the division helps promote the integrity of our capital markets to benefit investors and issuers alike.”
As expected, Gensler officially said that he will step down from his position as chair on Jan. 20, 2025, when President-elect Donald Trump takes office.
The SEC also highlighted several individual areas of enforcement, such as its initiative concerning off-channel communications, including, as previously reported by The DI Wire, its first cases charging recordkeeping violations against municipal advisers; its ongoing enforcement of the Marketing Rule, which resulted in charges against nine RIAs earlier this year; and its first enforcement actions alleging relationship scams.
In addition to its fines and penalties, the SEC reported that it obtained orders barring 124 individuals from serving as officers and directors of public companies, the second-highest number of such bars obtained in a decade.
The SEC reported that it distributed $345 million to harmed investors, marking more than $2.7 billion returned to investors since the start of fiscal year 2021.
Along with its enforcement results, the SEC also announced that it updated its list of unregistered entities that use misleading information to solicit primarily non-U.S. investors, adding 14 soliciting entities, two impersonators of genuine firms and four bogus regulators.
Known as the Public Alert: Unregistered Soliciting Entities, or PAUSE Program, the list enables investors to be better informed and potentially avoid being victims of fraud. The latest additions are firms that SEC staff found were providing inaccurate information about their affiliation, location, or registration. Under U.S. securities laws, firms that solicit investors generally are required to register with the SEC and meet minimum financial standards and disclosure, reporting, and recordkeeping requirements.
The PAUSE list also flags firms that are impersonating registered securities firms and entities that falsely claim to be government regulators, agencies or affiliates. Inclusion on the PAUSE list does not mean the SEC has found violations of U.S. federal securities laws or made a judgment about the merits of any securities being offered.
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