Compliance Corner: SEC Sets Out Busy Year For Fines, Enforcement Actions

Editorial Staff November 15, 2023


The US regulator has been flexing its muscles on a number of fronts, affecting sectors including wealth management.

The US Securities and Exchange Commission filed 784 enforcement actions in its financial year for 2023, rising 3 per cent from a year before, and orders for $4.949 billion in financial remedies – its second-highest figure – as the US regulator spelled out the extent of its actions in what has been a turbulent period for financial markets. 

The watchdog said it filed 162 "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.

The SEC’s actions spanned the securities industry, from billion-dollar frauds to emerging investor threats involving crypto asset securities and cybersecurity. It charged violations by public companies and investment firms as well as social media influencers. 

“The investing public benefits from the Division of Enforcement’s work as a cop on the beat,” SEC chairman Gary Gensler, said. 

The financial remedies comprised $3.369 billion in disgorgement and prejudgment interest and $1.580 billion in civil penalties. The disgorgement and civil penalties ordered were the second highest amounts on record. The SEC also obtained orders barring 133 individuals from serving as officers and directors of public companies, the highest number of officer and director bars obtained in a decade.

In addition, the SEC distributed $930 million to harmed investors, it said.

Elsewhere, the SEC issued whistleblower awards totaling nearly $600 million, the most ever awarded in one year, including a record-breaking $279 million awarded to one whistleblower. The Commission received more than 18,000 whistleblower tips in fiscal year 2023, a record.

Among other actions, 25 advisory firms, broker-dealers, and/or credit rating agencies, including Wells Fargo, HSBC, and Scotia Capital, agreed to pay combined civil penalties totaling more than $400 million to settle charges that they violated the recordkeeping requirements of the federal securities laws; and ABB Ltd, a global technology company, agreed to pay a $75 million civil penalty to resolve charges arising out of an alleged bribery scheme.

In addition, the SEC obtained judgments from federal courts ordering: 

Danske Bank, the Danish bank, to pay a $178.6 million civil penalty to resolve charges that it misled investors about its anti-money laundering compliance program and failed to disclose risks posed by the program’s significant deficiencies; and

Vale, a mining company, to pay $55.9 million combined in a civil penalty, disgorgement, and prejudgment interest to settle charges for allegedly false and misleading disclosures about the safety of its dams prior to a collapse that killed 270 people.

Marketing Rule
The SEC charged nine investment advisors. The SEC’s orders found that each of the charged firms advertised hypothetical performance to mass audiences on their websites without having the required policies and procedures. Each of the firms settled the charges, paying combined civil penalties of $850,000. In addition, FinTech investment advisor Titan Global Capital Management USA LLC agreed to pay more than $1 million combined in a civil penalty, disgorgement, and prejudgment interest to settle charges that it violated the marketing rule.

Register for FamilyWealthReport today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes