The U.S. Securities and Exchange Commission (SEC) said Wednesday that the number of enforcement actions it filed in the past year is flat from the previous year, but the size of the penalties it leveled is up by 11%, as is the complexity of the cases it’s tackling.
The SEC said today that it filed 734 enforcement actions in the fiscal year that ended Sept. 30, more or less unchanged from last year’s record of 735 actions. And, during the year, it obtained orders for more than $3 billion in penalties and disgorgement, up by 11% from the prior year.
While the volume of cases was flat year over year, the SEC said that this year’s total included an increasing number of cases involving highly complex products, transactions, and practices, which involved the financial crisis, market structure issues, and insider trading by market professionals.
Cases stemming from the financial crisis involved 29 separate actions naming 38 individuals, including 24 CEOs, CFOs and other senior corporate officers. Insider trading cases are on the upswing, the SEC reports, with 58 actions filed in fiscal 2012, generating charges for approximately 400 individuals and entities for illegal trading totaling approximately $600 million in illicit profits.
The agency also filed 134 enforcement actions related to broker-dealers, which represents a 19% increase over the previous year. It brought 147 enforcement actions against investment advisers and investment companies during the year, in line with the previous year’s record number. And, it also brought 79 actions for financial fraud and issuer disclosure violations.
Novel cases during the year, include charges against the New York Stock Exchange for compliance failures that gave certain customers an improper head start on trading information; and, the SEC’s first action against a dark pool for disclosure failures.
In its litigated enforcement actions, the SEC reports that its enforcement division prevailed at trial against 95% of defendants.
“We’ve now brought more enforcement actions in each of the last two years than ever before including some of the most complex cases we’ve ever seen,” said SEC chairman, Mary Schapiro.
Robert Khuzami, director of the SEC’s division of enforcement, added, “It’s not simply numbers, but the increasing complexity and diversity of the cases we file that shows how successful we’ve been. The intelligence, dedication, and deep experience of our enforcement staff are, more than any other factors, responsible for the division’s success.”
The SEC says that its enforcement results in 2012 were aided by a number of reforms and innovations put in place in the past two years, such as increased expertise in complex and emerging financial markets, products, and transactions; including enhanced training, the hiring of industry experts, and the creation of specialized enforcement units focused on high-priority misconduct; a flatter management structure; streamlined and centralized processes; the improved utilization of information technology; and a vastly enhanced ability to collect, process, and analyze tips and complaints.