WASHINGTON - The Securities and Exchange Commission's public finance abuse unit brought 17 standalone enforcement actions in fiscal year 2017, accounting for 3.8% of the SEC's total enforcement cases.
The SEC published its enforcement division's results for the year in a recently published report, which showed that the commission brought a total of 754 enforcement actions. “Standalone” actions brought in federal court or as administrative proceedings accounted for 446 of those, with the remainder represented by “follow-on” proceedings seeking bars based on the outcome of actions by the commission, criminal authorities, or other regulators and proceedings to deregister public companies.
SEC chairman Jay Clayton praised the work of the enforcement division, which the report said reviewed more than 16,000 tips, largely from the general public, and more than 20,000 reports of suspicious activity filed by broker-dealers and other entities.
“Through their tireless efforts to uncover wrongdoing and hold bad actors accountable, they defend our Main Street investors and support the integrity of our capital markets,” he said.
Enforcement division co-directors Stephanie Avakian and Steven Peikin said five core principles will guide their enforcement decision-making: focus on the Main Street investor; focus on individual accountability; keeping pace with technological change; imposing sanctions that most effectively further enforcement goals; and constantly assessing the allocation of resources.
“As enforcement directors our goal is to continue to protect investors, deter misconduct, punish wrongdoers and keep our markets the safest and strongest in the world,” said Avakian.
“The enforcement report clearly shows the broad range of the significant enforcement actions, penalties and money returned to investors,” said Peikin. “We will continue to bring enforcement actions involving misconduct that directly harms investors and our markets.”
The SEC frequently brings charges against different players related to the same set of facts, which is why the count is as high as 17, sources familiar with the commission said. If the SEC brings an administrative action cease-and-desist action against an issuer but also files a lawsuit against a banker in federal court, that counts as two actions arising from one set of facts.
The activities of the public finance abuse unit accounted for a much smaller chunk of enforcement activity compared to fiscal 2016, when the SEC brought 84 actions as part of the Municipalities Continuing Disclosure Cooperation Initiative, a voluntary self-reporting program that targeted issuer material misstatements and omissions in municipal bond offering documents and offered more lenient settlement terms for issuers and underwriters who voluntarily reported problems.. That means the 17 muni cases from fiscal 2017 represented a sharp drop from the 87 in 2016, and the MCDC also contributed to a drop in total SEC enforcement cases to 446 from 548 in fiscal 2016.
Parties in the commission’s total enforcement actions and proceedings were ordered to pay a total of $2.9 billion in disgorgement of ill-gotten gains, an increase over the prior year’s $2.8 billion. Penalties imposed totaled $832 million, a decrease from nearly $1.3 billion the previous year.
