SEC Announces Its 2013 Enforcement Results in the Financial Markets

Here is a link to the Securities & Exchange Commission’s press release reporting its enforcement numbers for fiscal year 2013, which ran from October through September. Over that period last year, the agency filed 686 public lawsuits in the name of our capital markets, and it obtained a record $3.4 billion in monetary sanctions, like disgorgement of profits, including $3 billion from 169 people and entities associated with the financial crisis. Some of those results may have been the product of the agency’s tally in 2011, when it filed 735 enforcement actions, the most in its history. The people charged reportedly include 70 CEOs, CFOs, and other senior business executives.

Other highlights? The agency brought several novel actions against securities exchanges, including one that resulted in a largest-ever penalty of $10 million against NASDAQ for the bungled Facebook IPO. It rewrote its longstanding settlement policy to require admissions of wrongdoing in certain cases, and it settled the first cases in conformity with that. It continued to prosecute insider trading at full tilt, and it paid out more than $14 million to whistleblowers under its new program.

Coming attractions? At a higher level, two stand out. First, there is a pipeline of activity to come. The Enforcement Division opened 908 new investigations last year, and it obtained 574 formal orders of investigation on previously-opened files. The SEC issues formal orders when it finds it likely that a securities-law violation has occurred, and the formal order grants staff the ability to issue subpoenas and administer oaths. Second, the Commission is harnessing the power of Big Data. It’s reportedly upgraded its data-analytics capabilities significantly, which means it can review and analyze higher volumes of electronic documents as well as conduct better forensic analysis overall, detecting patterns of fraud or other malfeasance in the data.