23 Oct SEC Announces Record Enforcement Year

Yesterday, the Securities and Exchange Commission proudly announced what Law360 confirmed is a record year in terms of new enforcement cases filed and monies disgorged by alleged and proven law violators. Over $4 billion in sanctions were levied and over 800 new cases brought in the year ended September 30. Note, however, that only about $2 billion of the $4 billion has actually been collected. They went after giant banks and private equity players, issuers along with key individuals at companies, and insider trading cases. They’re using more complex data analytics to build cases as well.

The enforcement staff also pointed out their recent initiative against gatekeepers such as attorneys and accountants for allegedly failing in their obligation to stop clients from using them to help their fraudulent schemes. They tend to have more success in regular district courts vs. their own internal administrative court, so more cases seem to be brought outside. There’s been some controversy about the role of the internal court, but that’s for another day.

Bad people should be brought to justice. Enforcement folks claim it’s not just about the numbers, how many cases, etc. But that’s what their press release touts. So while carefully investigated likely lawbreakers should be pursued, one hopes the SEC also carefully considers that the mere announcement of allegations by itself can ruin a sometimes later proven to be innocent person or company.