Last week, the SEC released details about its FY 2015 enforcement results. For the year that ended September 30, 2015, the SEC filed a record-high 807 enforcement actions and obtained orders totaling approximately $4.2 billion in disgorgement and penalties. Of these 807 enforcement actions, a record 507 were "independent actions," with the other 300 actions being either delinquent filing actions against issuers or administrative proceedings seeking bars against individuals. 

 

Over the SEC's last three fiscal years, it has achieved a steady increase in the total number of actions, the number of independent actions, and the amount of disgorgement and penalties ordered. The SEC compiled this data in the following chart:

 

Fiscal Year

2013

2014

2015

Independent Enforcement Actions

341

413

507

Follow-on APs

203

232

168

Delinquent Filings

132

110

132

Total Actions

676

755

807

Disgorgement and Penalties Ordered

$3.4 billion

$4.16 billion

$4.19 billion

The SEC emphasized that its efforts in FY 2015 produced a significant number of high-impact and "first-of-their-kind" actions. These included the first enforcement actions involving a private equity adviser (KKR) for misallocating broken deal expenses; a “Big Three” credit rating agency (S&P); an FCPA action against a financial institution (BNY Mellon); and a settlement requiring an admission by an auditing firm (BDO).

 

The WSJ reports that the SEC's enforcement actions related to financial reporting and audit fraud jumped to 134 cases in FY 2015 -- a marked increase over the 98 such cases in FY 2014 and 68 such cases in FY 2013. Beginning in 2013, SEC Chair Mary Jo White pledged that the SEC would reallocate the Enforcement Division's resources to renew its focus on accounting fraud. Shortly thereafter, the SEC established a Financial Reporting and Audit Task Force--which Enforcement Director Andrew Ceresney viewed at the time as an "Apollo 13 moment" in the SEC's renewed battle against financial reporting fraud:

Often, when you get a group of smart people in a room focused on a problem, you can find the answer.  Kind of reminds me of that scene in Apollo 13 where they bring all of the disparate tools available on the space capsule into a room, dump it on to a table in front of a bunch of smart people, and say find a way to fix the problem. And so we created the Financial Reporting and Auditing Task Force—what we like to call the Fraud Task force.  This is our Apollo 13 moment.

Ceresney reiterated last week that the SEC has maintained a greater focus in this area over the last couple of years. He added that while only some of the 134 financial reporting actions and audit fraud cases were found by the task force, the task force has also had the positive effect of focusing the SEC "on external and internal resources we weren’t using.”

 

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