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SEC Announces Record Number of Enforcement Actions in FY 2014

Last week, the Securities and Exchange Commission provided a summary of its enforcement activities for its fiscal year 2014 (ending in September). The SEC announced that it brought a record 755 enforcement actions and obtained orders totaling $4.16 billion in disgorgement and penalties. This was a jump from the 686 enforcement actions and $3.4 billion in disgorgement and penalties obtained in FY 2013. More than 135 parties were charged with reporting and disclosure violations, and 80 individuals were charged with insider trading. FY 2014 also marked the highest penalties to date against individuals who violated the Foreign Corrupt Practices Act. The SEC touted litigation successes, included jury verdicts against individuals who used offshore trusts to conceal shares of public companies, and against a hedge fund manager who funneled money to a Ponzi scheme. 

Several matters were first-time actions that highlighted new areas of focus for the SEC. Among these actions included an action involving risk controls required to provide customers with market access, an action under the investment adviser “pay-to-play” rule, and claims against a private equity firm alleging fraud regarding allocation of the funds’ fees. The SEC also brought its first action under its new Municipalities Continuing Disclosure Cooperation Initiative, which encourages municipal issuers and underwriters to self-report violations. Further, the SEC’s whistleblower program saw increased activity, as nine whistleblowers received a total of $35 million, and the SEC brought anti-retaliation charges for the first time. 

The SEC emphasized its intention to continue its aggressive enforcement strategy across a broad range of securities markets. It stressed its imposition of stiff penalties and demands for admissions in FY 2014, and attributed the record number of enforcement actions to improved and innovative use of technology to detect misconduct. 

©2020 Katten Muchin Rosenman LLPNational Law Review, Volume IV, Number 299

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About this Author

Associate

Margaret McQuade concentrates her practice on matters of employment law and executive compensation, with an emphasis on negotiating and drafting a wide range of agreements, and mediating and arbitrating claims on behalf of both employees and employers.

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