The Securities and Exchange Commission continued to build a strong record of first-of-their-kind cases that spanned the spectrum of the securities industry, according to the agency’s fiscal year 2015 enforcement report.

The agency’s first-of-their-kind cases include orders against:

A private equity adviser for misallocating broken deal expenses;

An underwriter for pricing-related fraud in the primary market for municipal securities; and

A “Big Three” credit rating agency.

Other first-of-their-kind cases brought by the agency include:

Violations arising from a dark pool’s disclosure of order types to its subscribers;

An FCPA action against a financial institution;

An admissions settlement with an auditing firm; and

An SEC rule prohibiting the use of confidentiality agreements to impede whistleblower communication with the SEC.

In the fiscal year that ended in September, the SEC filed 807 enforcement actions covering a wide range of misconduct, obtaining approximately $4.2 billion in disgorgement and penalties.  In comparison, the SEC filed 755 enforcement actions and obtained $4.16 billion in disgorgement and penalties in fiscal year 2014.

Of the 807 enforcement actions filed in fiscal year 2015, a record 507 were independent actions for violations of the federal securities laws, and 300 were either actions against issuers who were delinquent in making required filings with the SEC or administrative proceedings seeking bars against individuals based on criminal convictions, civil injunctions, or other orders. 

Financial fraud remained a significant enforcement priority this past fiscal year. Companies that faced enforcement actions include Computer Sciences Corporation, Deutsche Bank, Miller Energy, Broadwind Energy, Bankrate, and Trinity Capital. 

Data Analytics

The SEC also continues to hone its enforcement skills using data analytics. The agency charged 87 parties in cases involving trading on the basis of inside information.  “Many of these cases involved complex insider trading rings which were cracked by Enforcement’s innovative uses of data and analytics to spot suspicious trading,” the SEC said.

More details on those cases can be found here.

Market Manipulation

The SEC also continues to devote resources to combat market manipulation and microcap fraud, including by using trading suspensions to neutralize threats to investors after questions arise concerning the adequacy or accuracy of an issuer’s disclosures.  The SEC said suspended trading in the securities of 334 issuers, including 128 issuers arising from a microcap fraud-fighting initiative known as Operation Shell-Expel.

More details on those cases can be found here.

FCPA Cases

As Compliance Week previously reported, the SEC filed numerous significant actions under the Foreign Corrupt Practices Act (FCPA). These include cases against Bio-Rad Laboratories, Avon, Goodyear Tire & Rubber Company, BHP Billiton, and Hitachi.

It also brought a first-ever action against a financial institution for violations of the FCPA, and a first-ever action involving hiring practices against BNY Mellon. Individuals charged with FCPA violations include two former employees in the Dubai office of FLIR Systems, an officer of PBSJ, and a former officer of SAP.

Whistleblower Cases

The SEC’s Whistleblower Program awarded eight whistleblowers with total awards of approximately $38 million in fiscal year 2015. This includes $600,000 awarded to a whistleblower for providing key original information that led to a successful enforcement action against Paradigm Capital Management and its owner in fiscal year 2014.

Additionally, the SEC brought its first-ever action—against KBR—for violating Exchange Act Rule 21F-17, which prohibits the use of confidentiality agreements or other actions to impede a whistleblower from communicating with the SEC.

Complete details on all the cases the SEC brought in fiscal year 2015 can be found here.

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