Risk & Compliance

SEC Filed More Than 800 Cases in 2015

Enforcement actions in the financial reporting and audit area have nearly doubled, to 134, in the past two years, reflecting the SEC's increased fo...
Matthew HellerOctober 26, 2015

The number of U.S. Securities and Exchange Commission enforcement actions rose nearly 7% to 807 in fiscal 2015, recovering about $4.2 billion in disgorgement and penalties.

Of the enforcement actions filed in the year ended Sept. 30, a record 507 were for violations of securities laws, up from 413 in 2014, the SEC said. The remaining 300 were either actions against issuers who were delinquent in making required filings with the SEC or administrative proceedings seeking bars against individuals based on criminal convictions, civil injunctions, or other orders.

Andrew Ceresney, director of the SEC’s Division of Enforcement, said the agency filed 134 cases in the financial reporting and audit area in 2015, up from 98 in fiscal 2014, and 68 in fiscal 2013.

“There’s a lot more focus in this area in the last couple years and a lot more interest,” he told The Wall Street Journal.

In 2013, the SEC launched a Financial Reporting and Audit Task Force to help investigate reporting and audit fraud. Ceresney said the SEC has increased its focus on gatekeepers, including corporate auditors, over the past year.

In a first-of-its-kind case, BDO last month agreed to pay $2.1 million to settle charges that it improperly signed off on the financial statements of an employment staffing company that was implicated in a fraud scheme.

Other first-of-their-kind cases included:

  • A $30 million settlement with private equity giant Kohlberg Kravis Roberts & Co., including a $10 million penalty, over the misallocation of “broken deal” expenses to its flagship private equity funds.
  • A $58 million settlement with Standard & Poor’s Ratings Services over accusations of fraudulent misconduct in its ratings of certain commercial mortgage-backed securities.
  • An $18 million fine against brokerage firm Investment Technology Group to settle charges it operated a secret trading desk that misused the confidential trading information of clients who subscribed to its “dark pool.”

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