SEC enforcement recouped a record $6.4 billion in fiscal year 2022
The Securities and Exchange Commission recouped its highest-ever civil penalty dollar amount in fiscal 2022, in part due to the mammoth $1.2 billion fines against JP Morgan Securities, along with 16 other companies for failing preserve SMS communications on personal devices.
Money ordered in SEC actions (which includes reimbursement and prejudgment interest in addition to civil penalties) was $6.439 billion in fiscal 2022, an increase from $3.852 billion dollars from the previous fiscal year, according to the results of the application published on Tuesday. Civil penalties totaled $4.194 billion, while restitution fell 6% to $2.245 billion.
SEC Chairman Gary Gensler said he continues to be impressed with the commission’s Enforcement Division, while Enforcement Division Director Gurbir S Grewal said they tried to use “every tool in our toolbox” including penalties heavy enough to act as a deterrent.
“While we set a Commission record in the past fiscal year for a total amount ordered of $6.4 billion, including a record $4.2 billion in penalties, we do not expect to break those records and set new ones every year because we expect behaviors to change,” Grewal said of the report. “We expect compliance.”
SEC first fees paid with JP Morgan Securities in December 2021, arguing that between January 2018 and November 2020, its employees often communicated about business issues via personal devices, including using text messages, WhatsApp and personal emails. One of the recordings has been preserved. JP Morgan has agreed to pay $125 million to settle the charges.
End of September, SEC fined 16 other companies for “widespread and long-standing failures” in communications oversight that went to higher levels. The firms agreed to settle the charges and included many top names in financial services, including Barclays Capital, Bank of America Securities, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley and UBS. The the charges were considered by some to be a “punch in the bow” for the industry, alerting them that this would be part of all future reviews.
The SEC increased the total number of enforcement actions to 760 in fiscal 2022, a 9% jump from the prior year. Of the 760, 462 were new or “standalone” shares, up 6.5% from fiscal 2021; 129 lawsuits were filed against issuers “allegedly late in required filings”; and 169 were “follow-up” administrative actions, including debarment of registrants based on criminal or civil convictions.
Among the actions cited by the SEC was a $1 billion fine against Allianz Global Investors for allegedly concealing the downside risks of a complex options trading strategy from investors. The commission has also carried out actions in the ESG space, with Investment advisory subsidiary of BNY Mellon pay $1.5 million to settle charges that he misrepresented the ESG review of several managed mutual funds.
The co-founder of TradeZero America earlier this year, it also settled accusations that it briefly banned exchanges during the “meme actions” frenzy of early 2021, despite public claims to the contrary. Additionally, the SEC filed its first enforcement action related to higher interest regulation in June, charging Western International Securities and five of its representatives with violations stemming from recommendations to clients to buy risky ‘L’ bonds. .
Fiscal 2022 also marked the second highest year in terms of whistleblower awards, both in total dollars awarded and number of whistleblowers. In total, the SEC issued $229 million in 103 total awards and received a record number of tips alleging wrongdoing of more than 12,300.