SEC Releases FY 2023 Enforcement Results

November 16, 2023

What happened?

On November 14, 2023, the SEC released its FY 2023 Enforcement Results. In FY 2023, the SEC:

• Filed 784 enforcement actions, resulting in a 3% increase over the 760 filed in 2022, according to the SEC’s Press Release.
• Filed 501 standalone enforcement actions—the most since 2019.
• Ordered $1,580M in penalties and $3,369M in disgorgement, for a total of $4,949M in money ordered: about three-fourths of the SEC’s FY 2022 results ($6,439M)
• Overall, the SEC’s enforcement actions during the past fiscal year resulted in $930M returned to harmed investors, about the same amount that was returned in FY 2022 ($937M).

Below are some highlights from FY 2023:

• Recordkeeping Violations. 25 firms, including some RIAs, were charged with violations of recordkeeping requirements. Together, the 25 firms paid over $400 million in civil penalties to settle the charges.
• Marketing Rule Violations. The SEC charged nine RIAs with violations of the new Marketing Rule’s requirements for presenting hypothetical performance information. All 9 firms settled the charges and paid a combined total of $850,000 in civil penalties.
• A Deutsche Bank subsidiary and Goldman Sachs Asset Management, L.P. were charged with violations related to their offerings of ESG products. The SEC alleged that the firms marketed ESG products while lacking policies and procedures (or failing to implement them) to ensure their marketing was accurate.
• Adviser Misconduct. Two RIAs were charged with failing to maintain adequate disclosures regarding conflicts of interest related to use of their affiliates.
• Whistleblowers’ Rights. An RIA was charged with “raising impediments to whistleblowing” by failing to include an exception for SEC whistleblowers in their nondisclosure agreements. The RIA paid a $10 million civil penalty to settle the charges.

 

What does this mean for me?

The SEC is clearly focused on its mandate to protect investors. The Commission’s 2023 Enforcement Results underscore the Commission’s focus both on core regulatory issues—such as conflicts of interest and whistleblowers’ rights—to newer topics such as ESG and the new Marketing Rule. “The breadth and complexity of the issues addressed in our actions filed last year demonstrate the staff’s unwavering resolve, including when confronted by well-heeled adversaries, to doggedly pursue bad actors in every corner of the securities industry and hold them accountable for their transgressions,” said Sanjay Wadhwa, Deputy Director of the Division of Enforcement, according to the SEC’s Press Release.

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