SEC likely to continue improving its enforcement track record

November 15, 2011Articles Westlaw News & Insight Securities Blog

Like the CFTC before it, the SEC gleefully announced its greatly improved enforcement statistics for fiscal year 2011, prompting Chairman Schapiro to proclaim that "[w]e continue to build an unmatched record of holding wrongdoers accountable and returning money to harmed investors." All totaled, the SEC filed a record 735 enforcement actions in fiscal year 2011, resulting in more than $2.8 billion in penalties and disgorgement ordered. The large volume of cases was attributed in large part to the Enforcement Division's significant reorganization of 2009 and 2010. The announcement, interestingly, coincided just as the Senate is about to consider an appropriations bill that would increase the SEC's budget in a significant manner.

Of note, the SEC brought 15 actions where it named 17 individuals, including 16 CEOs, CFOs and other senior corporate officers, involving wrongdoing arising out of the financial crisis. Insider trading was also a major focus for the SEC, resulting in 57 actions alone, or an 8 percent increase over fiscal year 2010. The SEC also brought 89 actions for financial fraud and issuer violations. The SEC brought actions against individuals and firms targeting vulnerable investors, including the elderly and deaf community. Finally, the SEC increased the number of cases it brought against investment advisers and broker-dealers, totaling 146 and 112 respectively. So what does this all mean?

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