The Securities and Exchange Commission filed enforcement actions against 501 individuals or entities in the 12 months through September 2023 — an 8% increase over the prior fiscal year. 
The SEC obtained orders for $5 billion in financial remedies, the second highest amount in history, after the record-setting remedies ordered in fiscal year 2022. The financial remedies comprised $3.4 billion in disgorgement and prejudgment interest and $1.6 billion in civil penalties. Orders barring 133 individuals from serving as officers and directors of public companies hit a 10 -year-high. Financial corruption in the United States is a serious problem but these figures from the federal regulator protecting American investors are reason for optimism. The government forced $3.4 in ill-gotten gains to be disgorged by financial crooks and ordered another $1.6 billion in penalties to be paid in the most egregious cases. Amid great concern about Federal government efficiency, the SEC’s enforcement actions are inarguably deterring investor fraud. Moreover, the federal whistleblower program in 2023 awarded nearly $600 million to individuals who came forward with proof that firms and individuals were defrauding investors. One whistleblower was awarded a record $279 million reporting, more than doubling the previous record-breaking bounty. Federal law mandates whistleblower awards range from 10– to 30% of the money collected when sanctions exceed $1 million. Whistleblowers must provide the SEC with original, timely, and credible evidence that leads to a successful enforcement action and adhere to filing requirements in the whistleblower rules. The Commission received more than 18,000 whistleblower tips in fiscal year 2023, a record number — about 50% more than the record 12,300 whistleblower tips received in fiscal year 2022. The U.S. Congress passed the Whistleblower Protection Act in 1989 and enhanced it in 2012 to better protect whistleblowers from retaliation by employers. In recent years, many nations have adopted stronger whistleblower protection laws, but such statutes have not been enacted in many countries, including the world’s second largest economy, China. For the world’s largest economy, to be at the forefront in enforcing ethical financial activities and actors is an example of what makes America exceptional among the world of nations. Investors know they can bank on the United States system, which is part of the reason why large-company U.S. stocks have annually averaged a 10.5% over the 97 years through 2022 and the Standard & Poor’s 500 has been the best public and liquid equity market for investors in the world for many decades. In this time of increased skepticism of the federal government, it’s important to recognize the strong regulations and enforcement measures protecting investors and financial markets. Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. Any investments or strategies referenced herein do not take into account the investment objectives, financial situation or particular needs of any specific person. Product suitability must be independently determined for each individual investor. Tax advice always depends on your particular personal situation and preferences. You should consult the appropriate financial professional regarding your specific circumstances. The material represents an assessment of financial, economic and tax law at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions. This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice. |