Reported by: Matthew Solomon, Robin Bergen, Tom Bednar, Cleary Gottlieb

The SEC brought a total of 760 actions in fiscal year 2022, which included a total of 462 new “standalone” actions, up 6.5 percent from fiscal year 2021. The SEC obtained a total of $6.439 billion in monetary remedies, comprised of disgorgement, interest, and the record $4.2 billion in penalties. It was also a banner year for whistleblowers, with the SEC receiving 12,300 whistleblower tips and making 103 whistleblower awards totaling $229 million. The headline cases included:

• A billion-dollar case against an investment firm to settle fraud charges that three portfolio managers falsified records and lied to investors to cover up losses when they deviated from the disclosed strategy of a supposedly low-risk options-based “Structured Alpha” strategy.

• A major bank paid $361 million, including a $200 million civil penalty and $161 million in disgorgement, to settle charges of having offered and sold approximately $17.7 billion of unregistered securities due to an alleged failure to implement adequate internal controls to track its issuance of securities from a shelf offering after losing its “well known seasoned issuer” status.

The past year also demonstrated some shifts in the SEC’s enforcement priorities and strategy:

• Digital assets: The SEC’s focus on enforcement in the digital asset market shows no sign of abating, and the agency signaled an intent to continue robust enforcement by almost doubling the size of the Enforcement Division’s Cyber Unit (now called the “Crypto Assets and Cyber Unit”) and adding a team of dedicated litigators. In addition to its case against a crypto lending platform for allegedly offering unregistered securities and failing to register as an investment company,the SEC has continued to pursue cases charging providers of digital assets with unregistered securities offerings.

• Insider trading: As always, insider trading was high on the SEC’s priority list, though the 2022 fiscal year did not start out well for the SEC. Nevertheless, the SEC has continued to use data analytics in insider trading cases, yielding actions against nine individuals in three separate trading schemes, alongside parallel criminal charges

• ESG: Environmental, Social, and Governance (“ESG”) issues continue to be a growing area of focus for the SEC. In two cases, the SEC charged investment firms with misleading investors by stating that they invested pursuant to ESG policies and procedures, but not in practice following those policies and procedures.

• FCPA: The past year was relatively slow for enforcement of the Foreign Corrupt Practices Act (“FCPA”). The SEC charged Brazil’s second largest airline with bribing government officials to secure favorable tax reductions, and an American technology company agreed to pay more than $23 million to settle charges that its subsidiaries created and used slush funds to bribe foreign officials.

Read full report: https://corpgov.law.harvard.edu/2022/12/27/us-sec-enforcement-2022-year-in-review/#55