The Securities and Exchange Commission (SEC) has announced the completion of 784 enforcement actions in the fiscal year 2023 (FY23). Although this was only a marginal 3% increase from the previous year, the financial watchdog obtained orders for nearly $5 billion in remedies, with $1 billion distributed to harmed investors.
According to the SEC’s official statement, 501 of 784 actions were original, stand-alone probes, showing an 8% year-over-year increase. The SEC’s oversight extended to 162 follow-on administrative proceedings aimed at barring or suspending individuals based on prior convictions or injunctions and 121 actions against issuers for delinquency in mandatory SEC filings.
The SEC’s enforcement reached across the securities industry, targeting traditional frauds and adapting to new threats such as crypto asset securities and cybersecurity breaches. A diverse group of market participants was scrutinized in FY23, ranging from public companies and investment entities to individual gatekeepers and social media influencers.
“The investing public benefits from the Division of Enforcement’s work as a cop on the beat,” said Gary Gensler, the Chairman of SEC.
In FY 2023, the SEC filed 784 enforcement actions, obtained orders for nearly $5 billion in financial remedies, and distributed nearly $1 billion to harmed investors.
Read more about our Enforcement results for FY 2023: https://t.co/zDgxp1N3qy
— U.S. Securities and Exchange Commission (@SECGov) November 14, 2023
Record-Setting Financial Remedies and Whistleblower Awards
The Commission’s enforcement actions have culminated in nearly $5 billion in ordered financial remedies, a close second to the record set in the previous fiscal year. These included $3.369 billion in disgorgement, prejudgment interest, and $1.580 billion in civil penalties. Furthermore, the SEC has achieved a decade-high by barring 133 individuals from executive roles in public companies.
“Investor protection and enhancing public trust in our markets requires that we work with a sense of urgency, using all the tools in our toolkit,” said Gurbir S. Grewal, the Director of the Division of Enforcement at SEC. “As today’s results make clear, that’s precisely what the Enforcement Division did in fiscal year 2023.”
The SEC also made substantial investor reimbursements, distributing $930 million to those harmed. The Whistleblower Program granted nearly $600 million in awards, with a single whistleblower receiving $279 million. The program witnessed an influx of over 18,000 tips, a significant uptick from the prior year and part of over 40,000 total tips, complaints, and referrals received, marking a 13% rise from the fiscal year 2022.
SEC Shows Examples of Its Actions
In its latest report, the SEC also detailed a series of actions taken across various market segments to uphold federal securities laws and protect investors. For instance, one of the enforcement involved twenty-five advisory firms, broker-dealers, and credit rating agencies, including prominent names such as Wells Fargo, HSBC, and Scotia Capital. Collectively, these entities consented to pay over $400 million in civil penalties to resolve allegations that they failed to comply with recordkeeping requirements.
In addition, the agency launched multiple enforcement actions against individuals accused of orchestrating affinity frauds and Ponzi schemes. These schemes preyed on specific communities, exploiting trusted relationships within these groups. For example, the regulator cites the case of BKCoin, which ran a $100 million financial pyramid scheme.
Furthermore, the SEC cracked down on a securities fraud scheme perpetrated by eight social media influencers. These individuals allegedly exploited their online presence to manipulate exchange-traded stocks.
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