The Securities and Exchange Commission announced on October 22, 2015 a comprehensive report describing the results of enforcement actions taken against advisers in fiscal year 2015, which ended in September. The results are noteworthy, as they highlight the fact that the SEC is continuing to bring first of their kind cases against advisers across the securities industry.
The results show that in fiscal year 2015, the Commission filed 807 enforcement actions and obtained nearly $4.2 billion in disgorgement and other penalties. This is a large uptick from fiscal year 2014, in which 755 enforcement actions were filed, with monetary penalties and disgorgements of $4.16 billion.
Those cases in which we saw the first ever action taken against advisers include, but are not limited to those brought against a private equity adviser for misallocating broken deal expenses and the violation of an SEC rule that prohibits the use of confidentiality agreements to impede whistleblower communication with the agency.
Chair Mary Jo White commented on the report saying, “vigorous and comprehensive enforcement protects investors and reassures them that our financial markets operate with integrity and transparency, and the Commission continues that enforcement approach by bringing innovative cases holding executives and companies accountable for their wrongdoing sending clear warnings to would-be violators.” Chair White also noted that “the Enforcement Division’s leveraging of data, quantitative analytics and the expertise of our other divisions contributed significantly to this year’s very strong results.”
The SEC’s release regarding the FY 2015 enforcement actions also noted that from 2005 to 2012, independent actions filed by the SEC (excluding contempt actions, which have been excluded from enforcement action numbers for the last three fiscal years) ranged from approximately 318 to 445, and monetary remedies ordered ranged from $1 billion to $3.1 billion.
The continued effort by the Commission to bring action against wrong doers and their subsequent overwhelmingly positive record in doing so should be a piercing alarm in the ears of advisers to ensure that they have not only adopted adequate policies and procedures, but enforce a strong culture of compliance across their firms. It is pretty obvious at this point, that firms pay a hearty price in exchange for taking short cuts with regard to addressing compliance obligations.
SEC3 can assist your firm in creating, implementing and maintaining your policies and procedures. For further information, please contact your SEC3 representative or contact us at email@example.com.