Happy Thanksgiving! It is a beautiful time of year when we focus even more on being grateful for all the blessings in our lives. Gratitude connects us and it works to bring peace and harmony. We want to take the time to thank You; Our clients, colleagues, friends and even regulators for doing the hard work that you do to make this industry (and world) a better place. We hear a lot about how there is too much regulation and all the arguments against it. When you are feeling bogged down by it, maybe take a minute to consider what it would be like without the regulations we have in place. Of course we can always strive to do better and must continue to weigh the benefits of regulations. However we can’t lose sight of the fact that when regulation is light, we suffer as well. With that, we want to share how things panned out with the SEC last year with regards to enforcement.
SEC Enforcement Stats
Last week the SEC Division of Enforcement released its Annual Enforcement Results for fiscal year 2022 (ending in September). The recap shows that enforcement actions against Investment Advisers and Investment Companies came in at 174 – accounting for nearly a quarter of SEC enforcement actions and leading the other categories of enforcement including broker-dealers and delinquent filings.
There was an overall increase in enforcement actions of 9%. The Division brought a total of 462 stand-alone cases in fiscal 2022, versus 434 in 2021. Follow-on cases seeking individual bars or suspensions saw a material rise of 18% to 169.
The overall rate of penalties and disgorgement was up materially for 2022 – $6.4 billion versus between $3.8 and $5.7 billion over the previous five years. The rise was driven by increases in penalties, with disgorgement holding largely steady from 2021. Money returned to harmed investors came in at $937 million, a marked increase over the prior two years.
You should be able to avoid dealing with enforcement if you do the right thing. However, doing the right thing is not just having good intentions. You must be diligent as a fiduciary.