The U.S. Securities and Exchange Commission (the “SEC”) recently published its 2022 Enforcement Results.
The SEC filed 760 enforcement actions in fiscal year 2022, a 9 percent increase over 2021; resulting in $6.4 billion collected in civil penalties, disgorgement, and pre-judgment interest. This amount is 68% higher from the total amount collected in 2021.
Notable actions include the following:
Work related text-messaging failures:
The SEC collected $1.125 billion from firms in connection with the failure to maintain and preserve work-related text message communications conducted on employees’ personal devices.
Individual Accountability:
To ensure accountability from senior executives at public companies and incentivize them to prevent misconduct at their firms, the SEC charged several executives under Sarbanes-Oxley. The SEC ordered the executives to return bonuses and compensation following misconduct at their firms, even though the executives were not personally charged with the misconduct.
For example, three (3) former senior executives of infrastructure company Granite Construction, Inc. were ordered to return nearly $2 million in bonuses and compensation in connection with Granite restating its financial statements following misconduct by another former executive.
Recognizing Meaningful Cooperation:
The SEC also recognized meaningful cooperation from individuals and entities, and made concessions in its orders. For example, due to significant remedial measures taken by Headspin, Inc. (“Headspin”), whose former CEO propelled the company’s valuation to more than $1 billion, the SEC charged Headspin with fraud, but did not impose a penalty on Headspin for its wrongful conduct.
Rewarding and Protecting Whistleblowers:
The SEC also issued approximately $229 million in 103 awards, making it the SEC’s second highest year in terms of dollar amounts and number of awards. The Whistleblower Program also received a record high number of whistleblower tips alleging wrongdoing—more than 12,300 whistleblower tips.
The SEC protects whistleblowers by pursuing individuals or entities who take steps to impede, or retaliate against them for, their whistleblowing. For example, the SEC charged and penalized Brink’s Company, for requiring certain employees to sign restrictive confidentiality agreements.
Crypto:
Consistent with the announcement from the SEC in May 2022, the SEC made significant efforts to increase its staffing, in order to investigate crypto assets.
For example, the SEC charged eleven (11) individuals for their roles in creating and promoting Forsage, a fraudulent crypto pyramid and Ponzi scheme that raised more than $300 million from millions of retail investors worldwide, including in the United States.
If you have any questions about this alert, or any other regulatory matters, do not hesitate to reach out to:
