SEC recovered nearly $5bn in fines, disgorgements in fiscal ’23

Cash recoveries down slightly from record-setting fiscal 2022, but caseload rises by 8%.

SEC enforcers continued their record-setting pace in fiscal 2023, bringing more than 500 “stand-alone” cases and raking in nearly $5 billion in fines, disgorgements and prejudgment interest payments, the agency reported.

All in, regulators filed 784 enforcement actions in fiscal 2023, a 3 percent increase from fiscal 2022. Of those actions, 501 were new or “stand-alone” cases, an 8 percent increase from fiscal 2022, the commission’s enforcement division said in its annual review.

The $5 billion in fines, disgorgements and prejudgment interest payments was the second highest in commission history, regulators said in its report. The highest amount ever – more than $6.4 billion – came in fiscal 2022. Fiscal 2023’s disgorgements came to nearly $3.4 billion, fines nearly $1.6 billion, each of them the second highest in SEC history, regulators said.

‘Cop on the beat’

Regulators were careful not to single out any industry in their annual review. Fiscal 2023’s cases “spanned the securities industry, from billion-dollar frauds to emerging investor threats involving crypto asset securities and cybersecurity, and charged violations by diverse market participants, from public companies and investment firms to gatekeepers and social media influencers,” the commission said.

SEC Chairman Gary Gensler and his enforcement chief, former New Jersey Attorney General Gurbir Grewal, told industry from the beginning that they wanted more out of firm compliance departments. “The investing public benefits from the division of enforcement’s work as a cop on the beat,” Gensler said in the news release.

The commission’s whistleblower program set records of its own in fiscal 2023. Regulators gave out nearly $600 million in cash awards, the highest ever, including a $279 million payout. “The commission received more than 18,000 whistleblower tips in fiscal year 2023, a record number,” regulators said in the report, “and approximately 50 percent more than the then-record 12,300 whistleblower tips received in fiscal year 2022. The SEC received more than 40,000 tips, complaints and referrals in total, a 13 percent increase over fiscal year 2022.”

Private funds featured

Private funds may not be the SEC’s sole focus, but they were certainly featured players in Tuesday’s report.

Among the cases regulators highlighted in their review were:

  • The August 21, 2023 settlement with Titan Global Management over its hypothetical marketing claims and its hedge clauses;
  • The September 29, 2023 settlement with D.E. Shaw & Co. over the firm’s use of non-disclosure agreements that regulators claimed violated whistleblower protection rules;
  • The June 21, 2023 settlement with accounting firm Marcum over “systemic quality control failures” in its SPAC audits;
  • An August 14, 2023 settlement with London-based accounting firm Crowe UK and two of its executives over a 2018 SPAC audit; and
  • A September 5, 2023 settlement with private equity real estate manager Prime Group over its fee disclosures.