On Wednesday, November 9, 2011, the SEC issued a Press Release announcing that it had filed 735 enforcement actions in the fiscal year ending September 30, 2011, touting it as the "most enforcement actions filed in a single year." The Commission also highlighted the fact that "more than $2.8 billion in penalties and disgorgement [was] ordered in FY 2011 SEC enforcement actions."
The Commission stated that markets and investors benefitted from the fact that this was the first full fiscal year since the Division of Enforcement had implemented a number of changes in "its most significant reorganization since it was established in the early 1970s." In describing that reorganization, the SEC said: "the Division flattened its management structure, revamped the way it handles tips and complaints, facilitated the swift prosecution of wrongdoers through a formal program that encourages cooperation from individuals and companies in SEC investigations, and created national specialized units in five priority areas involving complex and higher risk areas of potential securities laws violations … ."
The SEC emphasized cases related to the financial crisis and insider trading cases, stating that it brought 15 separate actions and highlighted the enforcement actions involving collateralized debt obligations (such as the case involving the investment by five Wisconsin school districts, previously discussed here).
The Commission also emphasized the 57 insider trading cases it brought (marking an 8% increase over FY 2010), as well as the 18 judgments it obtained in cases related to Raj Rajaratnam’s Galleon Management. Although it did not occur last fiscal year, the SEC touted its $92.8 million judgment against Mr. Rajaratnam, as well.
Other highlights from the SEC’s announcement included:
• The SEC brought 89 actions in FY 2011 for financial fraud and issuer disclosure violations;
• The SEC’s Cross Border Working Group brought the first-ever stop orders for post-effective registration statements due to the resignation of a company’s independent auditor, several trading suspensions of securities based on the accuracy and completeness of their publicly filed information and a subpoena enforcement action against an overseas accounting firm for failing to produce documents related to an investigation into possible fraud by its client;
• The SEC also brought enforcement actions against individuals and firms targeting vulnerable investors; and
• The SEC filed a record total of 146 enforcement actions related to investment advisers and investment companies (a 30% increase over FY 2010) and 112 enforcement actions related to broker-dealers (a 60% increase over last year).
The SEC anticipates providing additional data on the last year’s results as part of the Performance and Accountability Report that will be published in the future.