The Enforcement Division (“Enforcement”) of the U.S. Securities and Exchange Commission (“SEC”) issued its Annual Report on Wednesday, November 6, 2019, covering FY 2019 (“Report”).
“The report shows how the principles we have articulated inform our work to protect investors and ensure that the U.S. securities markets remain the safest and strongest in the world,” said Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement.
“The actions and initiatives described in the report reflect our deliberate, principled approaches to investigations, litigation, and case resolutions,” said Steven Peikin, Co-Director of the SEC’s Enforcement Division.
By the numbers, FY 2019 was a successful year for Enforcement:
- 862 enforcement actions in total
- 526 standalone actions
- Suspended trading in the securities of 271 issuers
- Obtained nearly 595 bars and suspensions
- 42 Individuals prosecuted for Insider Trading
- $1.2 billion returned to harmed investors
- $4.439 billion plus in disgorgement and penalties
Of the standalone actions, 70% involved investment advisory issues, securities offerings, and issuer reporting/accounting and auditing collectively, with 6-7% each relating to market manipulation, insider trading, and broker dealer misconduct. The remaining 11% of cases were spread over varying issues. Cases against investment advisers/investment companies comprised the largest percentage of the total cases at 36% of overall cases.
Other Notable Facts from the Report:
- Enforcement continued to focus resources on two key priority areas: retail investor protection and combating cyber threats.
- Enforcement remained focused on individual accountability by pursuing charges, where appropriate, against executives at all levels of the corporate hierarchy.
- Share Class Selection Disclosure Initiative resulted in 95 investment advisory firms voluntarily self-reporting, which resulted in more than $135 million being returned to affected mutual fund investors.
- Enforcement filed its first charges for unlawful promotion of ICOs, with cases against a pair of celebrities.
- FY 2019 also saw enforcement actions to address auditor independence violations, failed audits, and other serious auditor misconduct.
- Enforcement was allocated 22 new slots to rebuild staffing levels that were lost previously. 15 new staff joined Enforcement in FY 2019.
How ACA Can Help
As you wrap up your 2019 compliance tasks and prepare for 2020, we’re here to help. ACA conducts compliance program reviews for hundreds of investment managers each year and has significant experience in helping firms to supplement their internal testing efforts and meet annual deadlines.
Learn more about how we can assist your firm. Request a meeting here.
For More Information
If you have questions about the recent report or would like more information, please contact your ACA Consultant or Damon Zappacosta.