During Fiscal Year 2014, SEC Files Record Number of Enforcement Actions

According to the U.S. Securities and Exchange Commission, the agency filed a record number of enforcement actions in 2014. Concluding the fiscal year on September 30, the regulator announced that it filed 755 SEC enforcement actions and obtained orders of $4.16 billion in disgorgement and penalties. Last year, the agency filed 686 actions and brought in $3.4 billion in fines.

The SEC credited new investigative strategies and innovations with analytical tools and data as playing a part in contributing to what it considers a solid year for enforcement. There were also first-ever cases, including actions over market access rules, “pay-to-play” for investment advisers, whistleblower retaliation, and stopping a municipal bond offering.

During fiscal year 2014, the SEC said that it charged over 135 parties with reporting and disclosure-related actions, focused resources on fighting microcap fraud and market manipulation-including penny stock scams-fought international fraud schemes, pursued firms for not setting up adequate risk controls, obtained the biggest penalty yet against an alternative trading system, enhanced oversight of dark pools, and imposed penalties for net capital rule violations.

Other actions by the SEC this year include:

• Filing charges for Regulation SHO violations over securities lending practices • Pursuing the NYSE and others for not complying with exchange rules
• Filing cases over hidden customer fees and failure to protect client’s material nonpublic data.
• Filing claims against investment advisory firms for not maintaining adequate controls on custody of customer accounts • Pursuing asset managers for wrongdoing • Issuing $35 million in awards to whistleblowers • Bringing charges against a hedge fund advisory firm for retaliating against a whistleblower • Holding auditors, accountants, and lawyers accountable for deficiencies or wrongdoings
• Charging 80 people with insider trading • Holding local and state governments accountable for maintaining standards of disclosure in securities issuances • Filing enforcement actions over misconduct related to collateralized debt obligations and mortgage-backed securities • Filing actions under the Foreign Corrupt Practice Act • Obtaining successful securities fraud verdicts, including a court decision ordering the Wyly brothers of Texas ordering them to pay $187 million and prejudgment interest
Among the SEC’s successful actions were cases against Merrill Lynch, Pierce, Fennel and Smith Inc., RBS Securities Inc. (RBS), three Morgan Stanley (MS) entities, Wells Fargo (WFC, Bank of America Corp. (BAC), and others.

SEC Chairperson Mary Jo White also credited the Municipalities Continuing Disclosure Cooperation (MCDC) Initiative. Among the settlements reached because of it were with a California school district accused of misleading bond investors.

If you are investors that has sustained losses because of securities fraud or some other form of wrongdoing committed by a securities industry professional or entity, you may have reason to pursue a claim to recover your funds. Please contact Shepherd Smith Edwards and Kantas, LTD LLP today.

SEC’s FY 2014 Enforcement Actions Span Securities Industry and Include First-Ever Cases, SEC, October 16, 2014

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UBS Brokers Are Still Selling Puerto Rico Muni Bonds, Stockbroker Fraud Blog, October 20, 2014

Wells Fargo to Pay $5M Over Inadequate Controls, Altered Documents, October 21, 2014

Pension Fund Securities Lawsuits: JPMorgan to Face MBS Case, PERSM Files Class Action Case, & Institutional Clients Can Sue BP
, Institutional Investor Securities Blog, October 17, 2014

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