The U.S. Securities and Exchange Commission's Enforcement Division filed an all-time high 735 actions and collected $2.8 billion in penalties in fiscal year 2011, the agency announced today.
Among the areas seeing an uptick in enforcement: insider trading, investment adviser wrongdoing and actions related to broker-dealers.
Division director Robert Khuzami in a news release called it a “record-breaking performance during a period of resource constraints,” and said the “remarkable accomplishment has its roots in the talent, grit and determination of the staff, as well as their creativity and willingness to consider new tools and approaches to stopping and deterring fraud and misconduct.”
In 2009 and 2010, Khuzami led a fundamental reorganization of the division, its biggest overhaul since it was established in the early 1970s. Initiatives included flattening the management structure, revamping how tips and complaints are handled, establishing a program to reward cooperation from individuals and the creation of specialized units in five complex areas of securities law.
The 2011 stats reflect the first full year since the reforms were implemented. “Markets and investors alike benefited substantially,” the SEC boasted. “This is evidenced by the filing of more enforcement actions in FY 2011 than ever filed in a single year in SEC history.”
According to the SEC, FY 2011 cases included 15 separate actions naming 17 individuals, including 16 CEOs, CFOs and other senior corporate officers, involving wrongdoing related to the financial crisis.
The agency went after JP Morgan for misleading investors in collateralized debt obligations and Wachovia Capital Markers for misconduct in the sale of two collateralized debt obligations tied to the performance of residential mortgage-backed securities. The SEC also charged six executives at Brooke Corp. and three executives at IndyMac Bancorp for misleading investors about the deteriorating financial condition at their companies.
The SEC brought 57 insider trading cases, an 8 percent increase over 2010. Among the targets: a Goldman Sachs employee and his father, a FDA chemist, and a former NASDAQ managing director.
The SEC brought 89 actions in FY 2011 for financial fraud and issuer disclosure violations. Also, the SEC filed 146 enforcement actions related to investment advisers and investment companies, a single-year record and 30 percent increase over FY 2010.