SEC sets single-year record for enforcement actions

October 19, 2016

The headquarters of the U.S. Securities and Exchange Commission are seen in Washington

U.S. Securities and Exchange Commission’s headquarters

The Securities and Exchange Commission recently announced its enforcement results for the 2016 fiscal year, which saw the highest number of enforcement actions in a single fiscal year.

The agency filed 868 enforcement actions targeting misconduct by companies, executives, other registrants, and gatekeepers such as lawyers and auditors, according to the SEC’s Oct. 11 statement. The SEC’s fiscal year runs from October to Sept. 30.

The SEC said its 868 actions represented a new single-year high for total enforcement actions, which include independent or stand-alone enforcement actions, follow-on administrative proceedings and delinquent filer proceedings.

This total continued an uptick from the two preceding fiscal years, as the commission said it brought a total of 807 and 755 total enforcement actions in the 2014 and 2015 fiscal years, respectively.

In total, the SEC said it obtained more than $4 billion in disgorgement and penalties during the 2016 fiscal year.

The commission also noted record numbers for specific types of enforcement actions.

Investment adviser cases

The commission said 2016 saw the highest number of cases brought against investment advisers or investment companies. The SEC brought 160 such cases, including 98 independent or stand-alone cases involving investment advisers or investment companies, which is also an agency record.

Notable among those cases, the private equity firm Blackstone Group LP agreed to pay a $39 million penalty in October 2015, according to an SEC statement.

The SEC said three private equity fund advisers in the Blackstone Group failed to disclose information to investors about how the advisers benefited from accelerated monitoring fees and discounts on legal fees, according to a statement announcing the charges.

The agency also highlighted a case against Morgan Stanley Investment Management, which agreed to pay $8.8 million in December to settle charges that a portfolio manager unlawfully conducted prearranged trading known as “parking” that favored certain advisory clients over others.

FCPA violations

In 2016, the SEC brought its highest-ever number of enforcement actions for violations of the Foreign Corrupt Practices Act, clocking in at 21 cases.

According to the SEC, notable companies sanctioned for FCPA-related violations included Anheuser-Busch InBev and Qualcomm Inc.

Anheuser-Busch agreed to pay a $6 million penalty Sept. 28 to settle SEC allegations that the company made improper payments to foreign government officials in India to boost sales.

On March 1, Qualcomm Inc. agreed to pay $7.5 million to settle FCPA-related charges stemming from the company’s practice of hiring relatives of Chinese government officials deciding whether to buy the company’s mobile technology products.

Whistleblower awards

The SEC also highlighted a number of milestones in its whistleblower program, which has awarded over $100 million since its inception in 2011.

In the 2016 fiscal year, the agency distributed $57 million in whistleblower awards to individuals, which is the largest ever by value in a single fiscal year, according to the agency.

The SEC likely hit this record by issuing two of its highest-ever whistleblower awards.

In August, the commission issued a $22 million whistleblower award, its second-largest since the program’s inception.

The SEC also issued a $17 million whistleblower award in June, which was the second-largest in history at that time.