SEC Announces Record Quarter for Number of Enforcement Actions

February 19, 2025

What happened?

The SEC announced on January 17, 2025, that they have filed a total of 200 enforcement actions in the first quarter of fiscal year 2025, including 118 standalone enforcement actions. The Division filed 75 actions in the month of October alone. These numbers represent the most actions filed in their respective periods since at least 2000.

Below are some highlighted actions taken in Q1 of FY2025:

• Financial Misstatements
  • On November 22, 2024, the SEC announced settled charges against UPS related to a failure to follow generally accepted accounting principles (GAAP) that would have materially reduced the value of one of their businesses. UPS was ordered to pay $45 million in penalties for improperly valuing UPS Freight.
  • After determining that Freight would likely sell for no more than $650 million, UPS relied on a third-party consultant’s valuation instead. The consultant made assumptions based on inadequate information provided by UPS in determining the value of Freight, which failed to incorporate a goodwill impairment in 2019. Consequently, the valuation was three times as much as UPS determined. Associate Director Melissa Hodgman noted that, “it is essential for companies to prepare reliable fair value estimates and impair goodwill when required. UPS fell short of these obligations, repeatedly ignoring its own well-founded sale price estimates for Freight in favor of unreliable third-party valuations.”
• Misleading Disclosure to Brokerage Customers
  • On October 31, 2024, the SEC announced that two affiliates of JP Morgan were charged with five separate enforcement actions, including misleading disclosures to investors, breach of fiduciary duty, prohibited joint transactions and principal trades, and failure to make recommendations in the best interest of their customers. JP Morgan agreed to pay over $151 million in civil penalties and voluntary payments to resolve four of the actions.
  • One of the SEC’s orders found that JP Morgan made misleading disclosures to brokerage customers who invested in their “Conduit” private funds products, which pooled customer money and invested it in private equity or hedge funds. The order states that the JP Morgan affiliate exercised complete discretion over when to sell and the number of shares to be sold resulting in investors being subject to market risks and the value of certain shares to significantly decline because JP Morgan took months to sell the shares.
• Alleged Bribery Schemes
  • On November 20, 2024, the SEC announced charges against three senior executives for alleged bribery schemes involving Indian energy companies Adani Green and Azure Power.
  • “As alleged, Gautam and Sagar Adani induced U.S. investors to buy Adani Green bonds through an offering process that misrepresented not only that Adani Green had a robust anti-bribery compliance program but also that the company’s senior management had not and would not pay or promise to pay bribes, and Cyril Cabanes participated in the underlying bribery scheme while serving as director of a U.S. public company,” said Sanjay Wadhwa, Acting Director of the Division of Enforcement, summarizing the complaint.
  • The charge alleges that Anadi Green raised $175 million from U.S. investors.
• Fraudulently Impersonating Financial Professionals
  • On December 11, 2024, the SEC announced charges against three individuals for impersonating financial professionals in a scheme that targeted retail investors.
  • Dating back to at least 2019, the individuals impersonated legitimate securities brokers and investment advisers in an online scheme where they stole more than $2.9 million from at least 28 investors. The three defendants, residing in Nigeria, created websites impersonating several legitimate securities brokers and investment advisers at well-known firms as part of their scheme to attract potential investors in the United States. “We caution the investing public to be on heightened alert when investing with someone who is soliciting investments through social media, even if that person appears to be a financial industry professional,” said Sanjay Wadhwa, warning potential investors.

What does this mean for me?

In the pending transition into the Paul Atkins chairmanship, these enforcement actions make apparent that the SEC shows no sign of slowing down.

“As these impressive figures reflect, the division has not taken its foot off the pedal in the new fiscal year,” Acting Director of the Division of Enforcement, Sanjay Wadhwa, noted. “On the contrary, the hard work of the dedicated staff in the Division, with assistance from throughout the Agency, has resulted in the busiest start to a fiscal year that I have witnessed in my 20-plus years at the Commission, providing invaluable protections to investors and promoting fairness and integrity in the securities markets.”

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