SEC Issues 2018 Enforcement Annual Report

November 5, 2018

The Enforcement Division (“Enforcement”) of the United States Securities and Exchange Commission (“SEC”) issued its second Annual Report on Friday, November, 2, 2018, covering FY 2018 (“Report”).

“As stewards of the SEC’s Division of Enforcement, our goal is to continue to protect investors, deter misconduct, punish wrongdoers and keep our markets the safest and strongest in the world,” said Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement.

“This year’s report again shows a broad range of significant enforcement actions, a thoughtful approach to remedies and relief, and the return of substantial sums to investors,” said Steven Peikin, Co-Director of the SEC’s Enforcement Division.

By the numbers, FY 2018 was a successful year for Enforcement:

  • 821 enforcement actions in total
  • 490 standalone actions
  • Suspended trading in the securities of 280 companies
  • Obtained nearly 550 bars and suspensions
  • 56 Individuals prosecuted for Insider Trading
  • $794 million returned to harmed investors
  • $3.945 billion plus in disgorgement and penalties

Of the standalone actions, 63% involved investment advisory issues, securities offerings, and issuer reporting/accounting and auditing collectively, with 10% each relating to market manipulation, insider trading, and broker dealer misconduct. The remaining 7% of cases were spread over varying issues. Cases against investment advisers/investment companies comprised the largest percentage of the total cases (tied with broker dealers) at 21% of overall cases.

Other Notable Facts from the Report: 

  • Cyber Unit became fully operational and spearheaded investigations which led to significant enforcement actions in the cyber area and brought the first case against a public company for failing to properly inform investors about a cyber breach.
  • Brought the SEC’s first action against a firm for violations of the Identity Theft Red Flags Rule.
  • Total headcount is down approximately 10% from its peak in FY 2016.
  • Enforcement believes the Supreme Court’s decision in Kokesh v. SEC has limited the ability to obtain disgorgement in certain long-running frauds resulting in Enforcement’s inability to collect approximately $900 million in those cases.

To review the complete report, please visit: https://www.sec.gov/files/enforcement-annual-report-2018.pdf

For More Information

If you have questions or would like more informaiton, please contact Damon Zappacosta or your ACA Consultant.