Reported by White and Case LLP

The linked article provides an overview of the U.S. Securities and Exchange Commission’s (SEC) enforcement efforts in 2024, highlighting its activities under outgoing Chair Gary Gensler. Enforcement actions dropped 26% from the previous year, with 583 cases filed. However, financial penalties reached a record $8.2 billion, largely due to a $4.5 billion judgment in the Terraform Labs case. The SEC maintained its focus on areas like cryptocurrency, artificial intelligence, and the marketing rule, but enforcement priorities may shift under incoming Chair Paul Atkins.

The SEC’s “marketing rule sweep” led to settlements with over a dozen investment advisers for misleading advertising practices. Key violations included the improper use of hypothetical performance data and untrue or unsubstantiated claims. The enforcement also addressed deficiencies in disclosures related to testimonials and endorsements, emphasizing compliance with advertising regulations.

Another significant focus was on beneficial ownership reporting and off-channel communications. The SEC charged public companies and investment managers for failing to meet reporting requirements under Sections 13(d), 13(g), and 16(a). A separate initiative targeting off-channel communications resulted in $600 million in penalties, encouraging firms to self-report violations for reduced penalties.

Whistleblower protection enforcement targeted companies with restrictive agreements deterring whistleblower activities. The SEC imposed penalties for provisions that interfered with individuals’ communications about potential securities violations. Additionally, enforcement of the “pay-to-play” and custody rules continued, addressing political contributions and safeguarding client assets, including actions against crypto-focused advisers.

Lastly, insider trading remained a priority, with the SEC pursuing cases to combat market abuse. As leadership transitions, the article anticipates shifts in enforcement priorities, particularly away from the intense focus on cryptocurrency and potentially toward a recalibration of regulatory policies under Paul Atkins.

Read full report: https://www.whitecase.com/insight-alert/sec-enforcement-year-end-overview