SEC’s Division of Enforcement Year-End Results Provide Insight into Record-Breaking Year in Monetary Sanctions, Novel Actions, and Evolving Enforcement Agenda
View Debevoise In Depth
Key takeaways:
- On November 15, 2022, the U.S. Securities and Exchange Commission’s (the “SEC” or “Commission”) Division of Enforcement (the “Division”) announced its enforcement results for fiscal year 2022 (“FY 2022”). While there was only a modest increase in the overall number of enforcement actions brought by the agency, 6.5% over fiscal year 2021 (“FY 2021”), monetary sanctions increased sharply, to a record $6.4 billion, a 67% increase over FY 2021. The actions highlighted by the SEC in its press release continue to provide valuable insights into evolving trends and areas of continued enforcement.
- The SEC brought 462 new stand-alone enforcement actions in FY 2022, a 6.5% increase over FY 2021. New actions remain below pre-pandemic levels, but there have been increases of similar magnitude for two years in a row, potentially signaling a return to Obama-era enforcement levels. Although the total number of actions increased only modestly, the Commission imposed a record $6.4 billion in monetary sanctions in FY 2022, the most in the SEC’s history, including $4.2 billion in penalties and $2.2 billion in disgorgement. In addition, FY 2022 was the SEC’s second highest year in terms of both whistleblower award amounts and the number of individual awards.
- The SEC is increasing its focus on a number of key industries, issues, and initiatives. Digital assets remained in the spotlight in FY 2022, while the focus on Special Purpose Acquisition Companies in FY 2021 has been replaced by a growing trend of actions involving recordkeeping violations, environmental, social, and governance (“ESG”) issues, cybersecurity, and private funds. Moving into the new fiscal year, we expect that the SEC’s level of enforcement activity will grow, penalties will continue to be high, and the aggressive enforcement environment will continue.