The Securities and Exchange Commission has filed 734 enforcement actions in the past year, one shy of last year’s record of 735, with a focus on investment advisors.

The SEC filed 147 enforcement actions in 2012 against investment advisers and investment companies, one more than the previous year’s record number.

The division’s investment advisor compliance initiative, which targets registered investment advisors who don’t have enough compliance oversight to prevent securities laws violations, filed numerous actions designed to identify threats early.

The SEC also filed actions charging three advisory firms and six individuals as part of its investigation into abnormal performance returns by hedge funds. Other actions against investment advisers included cases against UBS Financial Services of Puerto Rico and two executives for misleading disclosures relating to certain proprietary closed-end mutual funds, Morgan Stanley Investment Management for an improper fee arrangement, and OppenheimerFunds for misleading investors in two funds suffering significant losses during the financial crisis. 

UBS paid more than $26 million to settle the SEC’s charges while OppenheimerFunds paid more than $35 million.

The agency also targeted broker-dealers. The SEC filed 134 enforcement actions related to broker-dealers, a 19% from a year earlier. Broker-dealer actions included charges against a Latvian trader and electronic trading firms for their roles in an online account intrusion scheme that manipulated the prices of more than 100 NYSE and Nasdaq securities as well as charges against New York-based brokerage firm Hold Brothers On-Line Investment Services and three of its executives for their roles in allowing overseas traders to access the markets and conduct manipulative trading through accounts the firm controlled. 

The defendants in the Hold Brothers action paid a total of $4 million to settle the SEC’s charges, according to the commission.

The total number of enforcement actions in the past year, which ended Sept. 30, saw its most significant increase in cases involving highly complex products, transactions, and practices, including those related to the financial crisis, trading platforms and market structure, and insider trading by market professionals. Twenty percent of the actions were filed in investigations designated as National Priority Cases, representing the Division’s most important and complex matters.

The SEC also said it obtained orders in fiscal year 2012 requiring the payment of more than $3 billion in penalties and disgorgement for the benefit of harmed investors, up 11% from a year earlier.

In the past two years, the SEC has obtained orders for $5.9 billion in penalties and disgorgement.

“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,” said SEC Chairman Mary L. Schapiro. “We’ve now brought more enforcement actions in each of the last two years than ever before including some of the most complex cases we’ve ever seen.”

Robert Khuzami, Director of the SEC’s Division of Enforcement, added, “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.”

Register or login for access to this item and much more

All On Wall Street content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access