SEC Reports Record Enforcement Results for Fiscal Year 2023

The Securities and Exchange Commission disclosed its enforcement results for fiscal year 2023, showcasing a significant uptick in actions taken towards its stated goals of safeguarding investors and maintaining market integrity. The agency filed 784 enforcement actions, marking a 3% increase from the previous fiscal year. Notably, 501 of these were original, or “stand-alone” actions, representing an 8% increase over fiscal year 2022.

The SEC obtained orders for nearly $5 billion in financial remedies in fiscal year 2023, second only to fiscal year 2022 when it obtained $6.4 billion. These remedies included $3.369 billion in disgorgement and prejudgment interest and $1.580 billion in civil penalties, both also the second highest amounts on record. The SEC also barred 133 individuals from serving as officers and directors of public companies, marking the highest number of such bars obtained in a decade.

Investor restitution remained high, with the SEC distributing $930 million to harmed investors in the fiscal year. While less than the $937 million distributed in fiscal year 2022, it continued a trend of over $900 million in annual distributions for the second consecutive year, much greater than the $521 million distributed in fiscal year 2021 and the $602 million distributed in fiscal year 2020.

Chair Gary Gensler emphasized the importance of the Division of Enforcement’s role, describing it as a “cop on the beat.” In a statement released on Tuesday, he lauded the division’s effectiveness saying, “Last fiscal year’s results demonstrate yet again the Division’s effectiveness—working alongside colleagues throughout the agency—in following the facts and the law wherever they lead to hold wrongdoers accountable.”

The SEC’s Whistleblower Program experienced an unprecedented year, issuing awards totaling nearly $600 million, the most ever awarded in a single year, including a record-breaking $279 million to a single whistleblower. The number of whistleblower tips received reached over 18,000, another new record and nearly a 50% increase over 2022’s then-record of 12,300 tips.

The SEC’s enforcement efforts encompassed a wide array of issues across the securities industry, ranging from billion-dollar frauds to emerging threats in crypto asset securities and cybersecurity. Diverse market participants, including public companies, investment firms, and social media influencers faced charges for various violations.

The agency also utilized various tools during this fiscal year including imposing financial remedies on major companies, shaping industry initiatives, addressing misconduct undermining industry oversight, and enforcing recordkeeping requirements.

Some of the more prominent cases of the SEC’s enforcement year included the:

• More than $400 million in civil penalties obtained from 25 advisory firms, broker-dealers, and credit agencies, including major firms like Wells Fargo and HSBC, to settle charges that these firms violated recordkeeping requirements by failing to monitor their employees’ use of messaging apps and personal devices.
• $75 million penalty against ABB Ltd., a global technology company, for an alleged bribery scheme.
• $55.9 million in a civil penalty, disgorgement, and prejudgment interest to settle charges against Vale S.A., one of the world’s largest iron ore producers, for allegedly false and misleading disclosures about the safety of its dams prior to a collapse that killed 270 people.
• $850,000 obtained from nine investment advisers who violated the new marketing rule, advertising hypothetical performance on their websites without the required policies and procedures. Additionally, the SEC cited the more than $1 million it obtained from fintech investment adviser Titan Global Management USA LLC for also violating the marketing rule.
• $19 million obtained from various enforcement actions against Goldman Sachs, Citadel Securities, and Merrill Lynch for violations ranging from incomplete and inaccurate securities trading information to failing to file Suspicious Activity Reports.

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