In 2012, the Securities and Exchange Commission (“SEC”) filed 734 enforcement actions, which was one shy of the record 735 actions commenced in 2011. Of the 734 actions, 147 actions were filed against investment advisers and investment companies, which exceeded that number in 2011. Similarly, the SEC filed 134 enforcement action related to broker-dealers, which constituted a 19% increase from 2011. Most significantly, the majority of the enforcement actions regarded highly complex products, transactions and practices, including those relating to the financial crisis of 2008, trading platforms and market structure and insider trading. Two specific cases the SEC touted included: (1) a case against UBS Financial Services of Puerto Rico (“UBS”) and two of its executives for disclosure violations regarding closed-ended funds; and (2) a case against OppenheimerFunds (“Oppenheimer”) for misleading investors of two funds which incurred significant losses during the financial crisis. Based upon these cases, UBS and Oppenheimer were required to remit penalty payments in the amounts of $26 million and $35 million, respectively. As a result of the various enforcement actions actions, the SEC obtained orders requiring payment of $3 billion in penalties and disgorgement for the benefit of victimized investors, which is an 11% increase from 2011. Robert Khuzami, the Director of the SEC’s Division of Enforcement stated, “It’s not simply numbers, but the increasing complexity and diversity of the cases we file that shows how successful we’ve been. The intelligence, dedication, and deep experience of our enforcement staff are, more than any other factors, responsible for the Division’s success.” Similarly, Mary Schapiro, the SEC’s chairman, stated, “The record of performance is a testament to the professionalism and perseverance of the staff and the innovative reforms put in place over the past few years.”
Lax & Neville LLP has nationally represented registered investment advisory firms, as well as securities industry employees, financial services professionals and securities industry companies in regulatory matters and securities-related and commercial litigation. Please contact our team of attorneys for a consultation at (212) 696-1999.