SEC Announces Enforcement Results for FY22

The Securities and Exchange Commission has filed 760 total enforcement actions in fiscal year 2022, a 9% increase over the prior year.

These included 462 new, or “stand alone,” enforcement actions, a 6.5% increase over fiscal year 2021; 129 actions against issuers who were allegedly delinquent in making required filings with the SEC; and 169 “follow-on” administrative proceedings seeking to bar or suspend individuals from certain functions in the securities markets based on criminal convictions, civil injunctions, or other orders.

The SEC’s stand-alone enforcement actions in fiscal year 2022 ran the gamut of conduct, from “first-of-their-kind” actions to cases charging traditional securities law violations.

Money ordered in SEC actions, comprising civil penalties, disgorgement, and pre-judgment interest, totaled $6.439 billion, the most on record in SEC history and up from $3.852 billion in fiscal year 2021.

Gary Gensler

Of the total money ordered, civil penalties, at $4.194 billion, were also the highest on record. Disgorgement, at $2.245 billion, decreased by 6% from fiscal year 2021. Fiscal year 2022 was the SEC’s second highest year ever in whistleblower awards, in terms of both the number of individuals awarded and the total dollar amounts awarded.

“I continue to be impressed with our Division of Enforcement. These numbers, though, tell only part of the story,” said SEC Chair Gary Gensler.

“Enforcement results change from year to year. What stays the same is the staff’s commitment to follow the facts wherever they lead.”

“As reflected in these results, the Enforcement Division is working with a sense of urgency to protect investors, hold wrongdoers accountable and deter future misconduct in our financial markets,” said Gurbir S. Grewal, Director of the Division of Enforcement.

“A centerpiece of those efforts is ensuring that we are using every tool in our toolkit, including penalties that have a deterrent effect and are viewed as more than the cost of doing business. While we set a Commission record this past fiscal year for total money ordered at $6.4 billion, including a record $4.2 billion in penalties, we don’t expect to break these records and set new ones each year because we expect behaviors to change. We expect compliance.”

Abusive trading practices, such as insider trading, market manipulation, and cherry-picking, corrode trust in our markets, undermine market integrity, and victimize investors. The SEC brought a number of actions in fiscal year 2022 charging insider trading, including cases against senior executives at issuers and service providers. The latter category includes the SEC’s action alleging that a former member of Congress traded in the securities of a public company while in possession of nonpublic information he obtained while working as an outside consultant to the company. The SEC also charged executives with insider trading pursuant to a purported 10b5-1 trading plan while in possession of material nonpublic information.

The SEC charged 18 individuals and entities with conducting a fraudulent manipulative scheme in which dozens of online retail brokerage accounts were allegedly hacked and improperly used to purchase microcap stocks, which facilitated fraudsters who held those stocks to sell their holdings at artificially high prices, resulting in more than $1 million in illicit proceeds.

Finally, the SEC charged multiple investment advisers and associated representatives with defrauding their clients through cherry-picking in which the advisers preferentially allocated profitable trades, or failed to allocate unprofitable trades, to an adviser’s personal accounts at the expense of the adviser’s client accounts.

“The breadth of issues covered in last year’s actions amply demonstrates Enforcement staff’s skill in uncovering violations, its resourcefulness in deploying the right investigative tools and case strategy, and, above all, its doggedness in pursuing wrongdoers and obtaining remedies that promote market integrity while helping to protect investors,” said Sanjay Wadhwa, Deputy Director of the Division of Enforcement.

“From investigative attorneys and litigators to accountants, data scientists, investigators, and support staff, each member of Enforcement contributed to the many successes of the Division in the past fiscal year, and it is a great privilege to serve alongside them in protecting U.S. investors.”