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SEC enforcement actions resulted in $5 billion in penalties in 2023

On Behalf of | Nov 3, 2023 | Securities and Compliance

Securities and Exchange Commission Chair Gary Gensler provided details on the commission’s latest enforcement efforts during a recent address in Washington, D.C., Reuters reports.

Gensler was the keynote speaker Oct. 25 at the Securities Enforcement Forum, a gathering of securities attorneys and other top professionals in the industry. He began by discussing the work of the SEC and its staff to protect the investing public and regulate the integrity of the markets.

Gensler said that during fiscal 2023 running through September, the SEC filed more than 780 actions, up from about 700 the previous year, including more than 500 standalone cases. It obtained judgments and orders totaling $5 billion, with that work leading to $930 million distributed to harmed investors.  The $5 billion in total penalties and fees marked a decline from a record of $6.4 billion in fiscal year 2022.

133 individuals were barred from serving as company directors and officers during the year due to their misconduct, the highest total in a decade. “That includes a five-year bar on the former CEO from McDonald’s, who made false statements about the circumstances that led to his termination,” said Gensler. “That also includes a permanent bar on a former Wells Fargo senior executive, whom we charged with misleading investors about the bank’s abusive sales practices.”

One key area of focus for the SEC during the year has been the ongoing investigation into the use of unapproved outside messaging apps such as WhatsApp in the financial industry.

In October 2022, the SEC charged 15 broker-dealers and one affiliated investment advisor with widespread recordkeeping violations after finding widespread failures in maintaining and preserving electronic communications. The commission said employees with the firms routinely communicated about business matters through the use of text messaging applications on their personal devices, but the records of those communications were not properly preserved. The firms agreed to pay combined penalties of over $1.1 billion.

Overall, charges were settled against a total of 23 broker-dealers and investment advisers.

Gensler noted that the public’s tips, complaints, and referrals (TCRs) are essential to the SEC’s enforcement efforts. He said the SEC received more than 40,000 TCRs in the previous fiscal year, including more than 18,000 from whistleblowers.

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