SEC Announces Enforcement Results for Fiscal Year 2023

The U.S. Securities and Exchange Commission, SEC, has published a press statement outlining the Commission’s enforcement results for the previous fiscal year 2023. The statement thereby describes actions taken by the Commission against financial institutions, issuers and / or individuals engaged in the financial market for violating existing U.S. securities regulations. The SEC thereby obtained orders for nearly $5 billion in financial remedies, including disgorgement, prejudgment interest, and civil penalty orders. This included orders against major companies such as Wells Fargo, HSBC, Scotia Capital, ABB Ltd., Danske Bank, and Vale S.A., to name a few. In total, the Commission filed 784 enforcement actions which represents an increase of 3% compared to the previous fiscal year. Some of the key enforcement areas included the following:
1. Regulatory Compliance: The SEC conducted initiatives to ensure compliance with regulatory requirements, such as the Marketing Rule (marketing material must be fair, non-biased, and truthful), ownership reporting requirements for company insiders and major shareholders, and Regulation A compliance (registration exemption for certain small issuers). This involved charging investment advisers, microcap companies, and individuals for violations.
2. Oversight of the Securities Industry: The SEC took action against misconduct that undermined its ability to regulate the securities industry, including cases related to recordkeeping and reporting obligations. This involved charging entities like Goldman Sachs & Co. LLC, Citadel Securities LLC, and Merrill Lynch for various violations.
3. Whistleblower Protection: The SEC took forceful action to protect whistleblowers‘ rights and ability to report potential securities laws violations. This included settling charges against registered investment adviser D. E. Shaw & Co., L.P. for impeding whistleblowing.
4. Individual Accountability Measures: Approximately one fifth of the SEC’s cases involved charges against one or more individuals. The SEC obtained orders barring individuals from serving as officers and directors of public companies, which involved individuals from companies like Wells Fargo, McDonald’s, and Pareteum Corp.
5. Retail Investor Protection: The SEC took various actions to identify and prosecute individuals or entities engaged in affinity frauds, Ponzi schemes, and fraudulent investment schemes targeting specific communities. Affinity frauds typically involve perpetrators exploiting relationships of trust within specific communities, such as religious or ethnic groups, to carry out fraudulent investment schemes. Ponzi schemes, on the other hand, involve using funds from new investors to pay returns to earlier investors rather than generating legitimate profits.
6. Inaccurate Disclosures: The SEC brought charges against public companies due to alleged misconduct involving misstatements, fraud, or deficiencies in disclosures and controls during fiscal year 2023. Accurate and transparent disclosures by public companies are crucial for maintaining trust and integrity within the securities markets. The Division’s investigations resulted in charges against several notable companies for various forms of alleged misconduct, including Fluor Corporation, Newell Brands Inc. and Hyzon Motors, Inc., to name a few.
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To conclude it shall be noted that the SEC also managed to recover nearly $1 billion of funds for harmed investors. A detailed list of all offences, charges, and convictions may be found here.