On November 18, the U.S. Securities and Exchange Commission (SEC) announced its enforcement results for the 2021 fiscal year. During the fiscal year, which ended on September 30, 2021, the SEC filed 697 total enforcement actions, 434 of which were new enforcement actions, a 7% increase over the previous year. The SEC’s press release notes that “[t]he SEC’s whistleblower program was critical to these efforts and had a record-breaking year.”
The SEC also highlights a number of its enforcement actions related to emerging threats in the crypto and special purpose acquisition company (SPAC) spaces. “For example,” the press release states, “the SEC charged a company for operating an unregistered online digital asset exchange, charged a crypto lending platform and top executives alleging a $2 billion fraud, and brought an action against a special purpose acquisition company, its merger target, top executives, and others for alleged misconduct in a SPAC transaction.”
Other key areas in which the SEC filed enforcement actions include “holding individuals accountable,” “ensuring gatekeepers live up to their obligations,” “policing financial fraud and issuer disclosure,” and “charging improper conduct by investment professionals.” During fiscal year 2021, the SEC obtained judgments and orders for nearly $2.4 billion in disgorgement and more than $1.4 billion in penalties.
“The SEC’s Enforcement Division is the cop on the beat for America’s securities laws,” said Chair Gary Gensler. “As these results show, we go after misconduct wherever we find it in the financial system, holding individuals and companies accountable, without fear or favor, across the $100-plus trillion capital markets we oversee.”
“This year has seen a number of critically important and first-of-their-kind enforcement actions, as well as record-breaking achievements for our whistleblower program, which we expect will lead to even more successful actions in the future,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “Undeterred by the challenges of the pandemic, the dedicated public servants in the Enforcement Division have continued to overcome obstacles to bring these cases that protect investors and promote market integrity.”
On November 15, the SEC Whistleblower Program released its Annual Report to Congress for the 2021 fiscal year. As Grewal references, the report reveals that the program broke a number of fiscal year records, including the number of whistleblower awards issued, the total dollar amount awarded to whistleblowers, and the number of whistleblower tips received. During the 2021 fiscal year, the SEC awarded approximately $564 million to 108 individuals.
Gensler has previously praised the whistleblower program and noted the critical role it plays in the agency’s enforcement efforts. “The tips, complaints, and referrals that whistleblowers provide are crucial to the Securities and Exchange Commission as we enforce the rules of the road for our capital markets,” stated Gensler during a speech at National Whistleblower Day in July. “Each week, when I see the Commission’s enforcement actions, I’m reminded how the whistleblower program helps us be better cops on the beat, execute our mission, and protect investors from misconduct.”