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While early reports suggested that regulatory enforcement in 2017 was on the decline, the year turned out to be quite impressive. In fact, the SEC was as busy as ever, logging another record year for enforcement activity. Looking at data compiled in our SEC Sanctions Database, which tracks a subset of enforcement actions that resulted in monetary sanctions exceeding $1 million, the agency showed no sign of easing its efforts to sanction bad actors. For a sense of scope, of the total disgorgement ordered, 44% of the orders exceeded $100 million. Some of the largest actions included:
Looking at total enforcement activity for the year, the Commission brought 754 enforcement actions, including 446 standalone actions. A significant number of the Commission’s cases involved investment advisory issues, securities offerings, and issuer reporting/accounting and auditing. Other key areas of focus included market manipulation, insider trading, and actions against broker-dealers. In total, the agency obtained judgments and orders totaling more than $3.789 billion in disgorgement and penalties.
(Sidebar: There is no disputing that FY2016 was a standout year. In fact, of the more than $1 billion levied by the agency in the first half of 2016, $415 million was attributable to a settlement with Merrill Lynch, an action driven by our clients’ tips!)
At the end of the day, enforcement power might be best measured by its impact on investors. On this front, 2017 was a landmark year, with a record $1.07 billion returned to harmed investors. Standout actions in the retail space include one in which 13 individuals were charged after cheating 100 investors out of more than $10 million. In another, banking giant Barclays Capital was charged for its improper advisory and mutual fund fees, that overcharged clients by nearly $50 million. And the investment arm of SunTrust Bank recommended certain expensive funds over others, which resulted in more than $1.1 million in improper fees charged to clients.
By any and all measures, the regulators are hard at work. And we’re all better for it. For more information on 2017 activity, read our article in CFO magazine.