SEC Announces Strong Enforcement Results for Fiscal Year 2024: Record Penalties & a Shift Toward Proactive Compliance

The Securities and Exchange Commission (SEC) has unveiled its enforcement results for fiscal year 2024, showcasing significant efforts to hold wrongdoers accountable and strengthen the integrity of U.S. capital markets. The Commission filed 583 enforcement actions in total, securing a record $8.2 billion in financial remedies, the highest amount in SEC history.

While these numbers reflect the SEC’s continued commitment to enforcement, they also highlight a marked shift in the market’s behavior, with many market participants stepping up to self-report violations and proactively cooperate with investigations. This shift demonstrates the growing recognition of the importance of compliance in today’s financial landscape.

The total number of enforcement actions in fiscal year 2024 represents a 26% decline compared to 2023, reflecting a decrease in the volume of cases filed. The SEC’s 431 “stand-alone” actions (down 14% from last year), 93 “follow-on” proceedings (down 43%), and 59 actions related to issuers with delinquent filings (down 51%) indicate that while the SEC has been more selective in its approach, its efforts to combat misconduct are as focused as ever.

However, while the number of actions has decreased, the financial remedies secured in these cases reached new heights, with the Commission obtaining a staggering $8.2 billion in penalties and financial recoveries. This included $6.1 billion in disgorgement and prejudgment interest (the highest in SEC history) and $2.1 billion in civil penalties (the second-highest ever).

One key highlight of this fiscal year was the SEC’s successful trial against Terraform Labs and founder Do Kwon, which resulted in over $4.5 billion in remedies, including disgorgement, prejudgment interest, and civil penalties. This case alone accounted for more than half of the total financial remedies collected.

Fostering a Culture of Compliance

While the SEC’s enforcement results are certainly impressive, they are not the full story. In fiscal year 2024, market participants—ranging from public companies to major broker-dealers—demonstrated a marked shift toward proactive compliance. The SEC saw significant efforts from industry players to self-report issues, take corrective action, and fully cooperate with ongoing investigations. This proactive stance is something SEC Chair Gary Gensler highlighted in his remarks, noting that the SEC’s actions help build trust in U.S. capital markets.

“We’re seeing more market participants step up,” Gensler said. “They are self-reporting and remediating violations, and that’s exactly the kind of culture of compliance we want to see fostered.”

Fiscal year 2024 saw the SEC tackle emerging risks head-on, focusing on issues ranging from artificial intelligence to social media scams and cybersecurity. With the rise of AI and other technologies, the SEC has kept pace, charging entities like QZ Asset Management for falsely claiming to use AI to guarantee returns and fraudsters exploiting social media to run investment scams.

The SEC also remained vigilant against traditional investor risks, continuing to hold bad actors accountable for financial misstatements, poor internal controls, and gatekeeper failures. Notable cases included a $100 million civil penalty against FirstEnergy Corp. for political corruption, as well as actions against several high-profile firms such as Morgan Stanley, SAP, and Macquarie.

One area of focus was the SEC’s efforts to ensure that market participants comply with the Marketing Rule, which led to charges against investment advisers for misleading advertising practices. Similarly, the SEC ramped up its efforts to address off-channel communications, resulting in a record $600 million in penalties from more than 70 firms in total.

Protecting Whistleblowers & Holding Leaders Accountable

In an era of increasing corporate scrutiny, the SEC has placed a strong emphasis on whistleblower protections. In fiscal year 2024, the Commission authorized enforcement actions against firms that attempted to impede whistleblower rights, including J.P. Morgan, which faced an $18 million penalty—the largest civil penalty for a standalone violation of the Dodd-Frank whistleblower protection rule.

On the individual accountability front, the SEC continued to make strides, particularly in high-profile cases involving major figures. Notably, the founder of Terraform Labs, Do Kwon, was ordered to pay over $200 million in penalties and barred from serving as an officer or director of any public company. Other individuals, such as the former CEO and Chief Risk Officer of Silvergate Capital, were also held responsible for misleading investors about the strength of their compliance programs.

The SEC’s Continuing Commitment to Investor Protection

The SEC’s continued efforts to hold firms accountable serve as an important reminder of the critical importance of maintaining strong compliance frameworks. As regulatory landscapes evolve, especially in the wake of market disruptions and complex financial transactions, companies in the financial services sector must stay ahead of the curve. Transparency, robust internal controls, and vigilance against market manipulation should be at the forefront of every organization’s risk management strategy.

For organizations in the financial services space, it is clear that regulatory adherence isn’t just a matter of ticking boxes; it’s an ongoing process that demands constant attention, diligence, and adaptation. As the SEC continues to take a firm stance on enforcement, it serves as a reminder to all firms that the cost of non-compliance extends far beyond any fine—it can fundamentally disrupt business operations and consumer trust. It’s not just about avoiding penalties; it’s about fostering an organizational culture of integrity and transparency that stands up to scrutiny in an increasingly complex regulatory environment.

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