The Securities and Exchange Commission (SEC) obtained a record $8.2 billion in financial remedies for fiscal year (FY) 2024 despite issuing fewer enforcement actions than the previous year, according to the agency’s annual report detailing the results of its enforcement activity.
Approximately 56 percent of the total remedies ordered was attributable to a monetary judgment obtained following the SEC’s court judgment against Terraform Labs and Do Kwon, who were charged with one of the largest securities frauds in U.S. history.
The agency reported that $6.1 billion of remedies ordered were disgorgement and prejudgment interest, which is also the highest amount on record, according to the report. The SEC also recorded its second-highest total in civil money penalties at $2.1 billion.
The agency’s 583 enforcement actions represent a 26 percent decline compared to FY 2023. Of those cases, 431 were classified as “stand-alone” actions, representing a 14 percent reduction compared to the previous fiscal year. Another 93 actions were classified as “follow-on" administrative proceedings seeking to bar or suspend individuals from certain functions in the securities markets based on criminal convictions, civil injunctions, or other orders. Follow-on actions were down 43 percent from the previous year. Fifty-nine SEC actions sought remediation from issuers who were allegedly delinquent in making required filings with the SEC, which represented a decrease of 51 percent.
“The Division of Enforcement is a steadfast cop on the beat, following the facts and the law wherever they lead to hold wrongdoers accountable,” SEC Chair Gary Gensler said. “As demonstrated by this year’s results, the division helps promote the integrity of our capital markets to benefit investors and issuers alike.”
In November, Gensler announced his intention to step down as SEC chair the same day Donald Trump is inaugurated for his second term as president.
Sanjay Wadhwa, acting director of the SEC’s Division of Enforcement, explained the contrast between record high redress amounts and fewer enforcement actions by noting the agency prioritized “high impact” actions targeting noncompliance throughout the securities industry.
“At the same time, market participants across the spectrum – from public companies to major broker-dealers and advisory firms – stepped up efforts to self-report, remediate, and meaningfully cooperate with our investigations, answering our call to foster a culture of compliance,” Wadhwa said. “What our numbers do not reflect, however, are countless investigations that may not have resulted in an enforcement action for evidentiary or other reasons, or where we declined to pursue an enforcement action, but that shined a spotlight on potentially problematic conduct and caused responsible market participants to cease engaging in it. All of this adds up to protecting innumerable investors and promoting trust in our capital markets.”
Some of the largest financial remediation amounts came as a result of the SEC’s actions involving the following cases:
- Morgan Stanley agreed to pay approximately $166 in disgorgement and an $83 million civil money penalty for a multi-year improperly disclosing confidential information about the sale of large quantities of stock known as “block trades.”
- The advisory firm Macquarie agreed to pay disgorgement and prejudgment interest of $9.8 million and a $70 million civil penalty to resolve allegations that it overvalued approximately 4,900 largely illiquid collateralized mortgage obligations held in 20 advisory accounts and for executing hundreds of cross trades between advisory clients that favored certain clients over others.
- FirstEnergy agreed to a pay $100 million civil penalty to resolve the SEC’s charges alleging the company engaged in a multi-year political corruption scheme involving payments to an entity controlled by a state legislator in exchange for official action benefitting FirstEnergy.
- SAP agreed to pay disgorgement and prejudgment interest of more than $98 million to resolve charges that the software company violated the Foreign Corrupt Practices Act arising out of bribery schemes in South Africa, Malawi, Kenya, Tanzania, Ghana, Indonesia, and Azerbaijan.
Additionally, the SEC obtained orders barring 124 individuals from serving as officers and directors of public companies, the second-highest number of such bars obtained in a decade.
The agency also distributed $345 million to harmed investors, bringing the total returned to investors since the start of fiscal year 2021 to more than $2.7 billion. The SEC also received 45,130 tips, complaints, and referrals in fiscal year 2024, the most ever received in one year. This total included more than 24,000 whistleblower tips, more than 14,000 of which were submitted by two individuals. The SEC issued whistleblower awards totaling $255 million.