From staff reports WASHINGTON – The Securities and Exchange Commission filed 583 enforcement actions in Fiscal Year 2024 while obtaining orders for $8.2 billion in financial remedies, the highest amount in the agency’s history.
The 583 enforcement actions represented a 26% decline in total enforcement actions compared to FY 2023. Of those cases, the SEC filed 431 “standalone” actions, which was 14% less than in the prior fiscal year; 93 “follow-on' administrative proceedings seeking to bar or suspend individuals from certain functions in the securities markets based on criminal convictions, civil injunctions, or other orders, which was 43% less than the previous fiscal year; and 59 actions against issuers who were allegedly delinquent in making required filings with the SEC, which represented a decrease of 51%.
The $8.2 billion in financial remedies consisted of $6.1 billion in disgorgement and prejudgment interest, also the highest amount on record, and $2.1 billion in civil penalties, the second-highest amount on record.
Approximately 56% of the $8.2 billion financial remedies ordered is attributable to a monetary judgment obtained following the SEC’s jury trial win against Terraform Labs and Do Kwon, who were charged with one of the largest securities frauds in U.S. history.
“The Division of Enforcement is a steadfast cop on the beat, following the facts and the law wherever they lead to hold wrongdoers accountable,” said SEC Chair Gary Gensler. “As demonstrated by this year’s results, the Division helps promote the integrity of our capital markets to benefit investors and issuers alike.”
In Fiscal Year 2024 the Enforcement Division “continued to vigorously enforce federal securities laws by recommending to the commission high-impact enforcement actions addressing noncompliance throughout the securities industry and resulting in robust financial remedies,” said Sanjay Wadhwa, acting director of the division. “At the same time, market participants across the spectrum – from public companies to major broker-dealers and advisory firms – stepped up efforts to self-report, remediate, and meaningfully cooperate with our investigations, answering our call to foster a culture of compliance.”
What the numbers do not reflect are “countless investigations that may not have resulted in an enforcement action for evidentiary or other reasons, or where we declined to pursue an enforcement action, but that shined a spotlight on potentially problematic conduct and caused responsible market participants to cease engaging in it,” Wadhwa continued. “All of this adds up to protecting innumerable investors and promoting trust in our capital markets.”
The division “kept pace with emerging threats presented by misstatements regarding artificial intelligence, fraudsters using social media to perpetuate relationship scams, and more, while maintaining its focus on evergreen investor risks such as material misstatements, deficient internal controls, and major gatekeeper failures,” said Sam Waldon, acting deputy director of the Division of Enforcement.
Also in FY 2024, the SEC obtained orders barring 124 individuals from serving as officers and directors of public companies, the second-highest number of such bars obtained in a decade.
In FY 2024 the SEC distributed $345 million to harmed investors, marking more than $2.7 billion returned to investors since the start of FY 2021. The SEC received 45,130 tips, complaints, and referrals in FY 2024, the most ever received in one year, including more than 24,000 whistleblower tips, more than 14,000 of which were submitted by two individuals. The SEC issued whistleblower awards totaling $255 million. Proactive compliance Market participants including public companies, investment advisers, and broker-dealers self-reported or remediated securities law violations or otherwise cooperated meaningfully with the Enforcement Division’s investigations in FY 2024.
This included matters involving a range of alleged violations, such as material misstatements, fraud, record- keeping violations, and control failures related to cybersecurity.
In response, the division recommended, and the commission approved, resolutions imposing reduced civil penalties or even no civil penalties, including cases involving very large firms such as J.P. Morgan Securities. Whistleblower protection In FY 2024 the Enforcement Division recommended, and the commission authorized, a series of settled enforcement actions to address violations of the Dodd-Frank whistleblower protection rule, which prohibits market participants from taking any action to impede would-be whistleblowers from contacting the SEC, including where firms purported to limit customers’ ability to voluntarily contact the SEC or required employees to waive the right to a possible whistleblower monetary award.
Those actions included an $18 million civil penalty against J.P. Morgan, the largest penalty on record for a standalone violation of the whistleblower protection rule. Disclosures required Federal securities laws require certain insiders and market participants to disclose their securities holdings and transactions. Compliance with those laws is essential for investors to make informed investment decisions.
In FY 2024, the SEC settled charges against more than two dozen entities and individuals for failures to timely report information about their holdings and transactions in public company stock or for contributing to filing failures by their officers and directors. The SEC also settled charges against 11 institutional investment managers for failing to disclose certain securities holdings in reports they were required to file because they have discretion over more than $100 million in certain securities. Robust remedies The Enforcement Division’s investigations led to orders imposing robust financial remedies in litigated and settled matters in FY 2024.
For example, after a jury verdict finding Terraform Labs and founder Do Kwon liable for fraud, the defendants agreed to a final judgment ordering them to pay more than $4.5 billion in disgorgement, prejudgment interest and civil penalties, the highest remedies ever obtained by the SEC after a trial. Major fraud The division continued to focus in FY 2024 on holding individuals and entities accountable for preying on investors. The division’s investigations led to charges alleging frauds ranging from Ponzi schemes targeting specific communities to billion-dollar frauds with thousands of victims.
Emerging technology, emerging risk Fiscal Year 2024 saw heightened investor risk from emerging technologies and cybersecurity incidents, and from market participants using social media to exploit elevated investor interest in emerging investment products and strategies. The division investigated noncompliance and false or misleading disclosures involving artificial intelligence, social media, cybersecurity, crypto, and more.
For example, the SEC settled charges against The Intercontinental Exchange and nine wholly owned subsidiaries, including the New York Stock Exchange, for failing to timely inform the SEC of a cyber intrusion as required by Regulation Systems Compliance and Integrity. Individual accountability Enforcement actions against individuals included the SEC’s permanent suspension of Benjamin Borgers, managing partner of an eponymous audit firm, from appearing and practicing as an accountant before the commission as part of a resolution of an alleged fraud that involved more than 1,500 SEC filings – one of the largest ever wholesale failures by a “gatekeeper.” Borgers also agreed to pay a $2 million civil penalty.