On November 22, 2024, the Securities and Exchange Commission (the “SEC”) published its enforcement results for fiscal year of 2024. The report shows a mixed result. The SEC only brought 583 actions in FY 2024, a 26% decrease from FY 2023. However, the SEC also reported a record breaking $8.2 billion in financial remedies, the highest in SEC history. This blog post will review some key takeaways from the SEC FY 2024 report.
Enforcement Statistics
The enforcement statistics show a significant drop in SEC enforcement activities. The SEC only brought 431 standalone enforcement actions, which was 14% less than the prior fiscal year and was the lowest number in the last five fiscal years with the exception of FY 2020. The number of follow-on administrative proceedings also fell to 59, which was 43% less than the prior fiscal year and the lowest in the last five fiscal years. The SEC brought only 59 actions against issuers who were allegedly delinquent in making required filings, a 51% decrease from the last fiscal year and also the lowest in the last five fiscal years.
In foreshadowing the low number of enforcement actions, Sanjay Wadhwa, Acting Director of the Division of Enforcement, highlighted the investigations that may not result in enforcement actions – “What our numbers do not reflect, however, are countless investigations that may not have resulted in an enforcement action for evidentiary or other reasons, or where we declined to pursue an enforcement action.”
In contrast to the low enforcement actions number, the SEC obtained orders for $8.2 billion in financial remedies, the highest amount in SEC history. However, approximately 56% of the $8.2 billion financial remedies is attributable to a monetary judgment obtained in the SEC’s jury trial win against Terraform Labs and Do Kwon for defrauding investors in crypto asset securities. Director Sanjay Wadhwa commented on the high financial remedies number by pointing to the SEC’s focus on high-impact enforcement actions – “the Division continued to vigorously enforce the federal securities laws by recommending to the Commission high-impact enforcement act addressing noncompliance throughout the securities industry and resulting in robust financial remedies.”
Proactive Compliance
The FY 2024 report highlighted the efforts made by market participants in self-reporting or remedying securities law violations or otherwise cooperating with the SEC’s investigations. To credit proactive compliance, the SEC offered reduced civil penalties or no civil penalties, including in matters involving major companies. In October 2024, in an enforcement action, the SEC found that J.P. Morgan Securities LLC (JPMS) violated Regulation Best Interest.