November 22, 2017
Division of Enforcement Releases Annual Report
On November 15, 2017, the SEC’s Division of Enforcement released its annual report for Fiscal Year 2017 (“FY 2017”). The report explains how the Division of Enforcement’s decision making throughout FY 2017 was guided by the following five principles:
The Commission’s five principles facilitated numerous accomplishments during FY 2017 based on quantitative metrics. The Commission brought 754 actions and obtained $3.7 billion in disgorgement and penalties. Furthermore, $1.07 billion was returned to harmed investors, 309 companies were suspended in trading securities and 625 individuals were barred or suspended.
In an effort to align the Commissions’ principles with its allocation of resources, the Commission created the Cyber Unit and a Retail Strategy Task Force. The Cyber Unit, which combines the Commission’s cyber-related expertise with its proficiency in digital ledger technology, will focus on the following key areas:
The Retail Strategy Task Force was created to safeguard the long-term interests of retail investors through the use of technology and data analytics. In addition to violations implicating the microcap market, Ponzi schemes and offering frauds, the Retail Strategy Task force will focus on the following engagements between investment professionals and retail investors:
WHAT DOES THIS MEAN FOR ME?
The Commission’s annual report provides a statistical breakdown of their enforcement actions during FY 2017. While the report highlights numerous successes quantitatively, the Commission has expressed its intentions to also strive for qualitative achievements. Serious violations will thus be met with meaningful punishments to recoup ill-gotten gains, incapacitate wrongdoers and deter misconduct.
Advisers are strongly encouraged to ensure they maintain a robust compliance program. Fairview® will continue to assist clients with supporting their compliance programs in addressing the Commission’s current and future areas of focus. If you have any questions or concerns about this annual report, please contact Fairview®.