The SEC Division of Enforcement (the "Division") reviewed its record over the past fiscal year, highlighting COVID-19 related enforcement efforts and the successful expansion of the whistleblower program.
In its annual report for 2020, the Division described its "triage" of 16,000 COVID-19 related tips, complaints and referrals. The Division also cited investigative work including 150 COVID-19 related matters, and the work of the Coronavirus Steering Committee that led to the suspension from trading of two dozen issuers for potential COVID-19 related fraud (e.g., claims about COVID-19 treatments, the manufacture and sale of personal protection equipment, etc.).
The Division stated that it brought 715 enforcement actions and obtained $4.68 billion in disgorgement and penalties - the highest amount on record. In addition, the Division reported approximately $175 million whistleblower awards to 39 individuals this year, bringing the total - since the program was established in 2011 - to $562 million in awards to 106 individuals.
Commentary
A few things stand out in the Division of Enforcement's Annual Report for a very unusual year. There was a decrease in the total number enforcement actions (and in the number of "standalone" actions). This was likely the result of the COVID-19 pandemic, but the number of standalone cases decreased by more than 20%, which is a significant drop. In particular, there was a drastic decrease in the number of cases involving investment advisers / investment companies (87 actions, down from 191 last year) and a large drop in the number of issuer reporting / audit and accounting cases (62 actions, down from 92 last year), which are often the most complicated cases the SEC investigates. Despite the lower number of cases, the SEC obtained a record amount of financial remedies, including more than $3.5 billion in disgorgement. This is especially impressive given the COVID-19 pandemic and the fact that the SEC is dealing with the ramifications of the Supreme Court's decision in Liu (covered here).
Primary Sources
- SEC Press Release: SEC Division of Enforcement Publishes Annual Report for Fiscal Year 2020
- SEC Enforcement Annual Report 2020
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