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SEC Enforcement Penalties Fall to 18-Year Low
The Wall Street regulator obtained about $1 billion last year, the lowest amount since the 2008 financial crisis.
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Wall Street’s top enforcer obtained penalties last year totaling $1.1 billion, the lowest tally in nearly two decades.
The Securities and Exchange Commission’s numbers, released Tuesday, underscore the pullback in securities enforcement under the Trump administration, which has pursued a deregulatory agenda and given priority to making it easier for companies to raise capital and offer new ways to trade stocks.
The agency filed 348 enforcement actions during its latest federal fiscal year, which ended in September. That was nearly half the 634 enforcement actions the SEC averaged every year over the prior decade.
The $1.1 billion the SEC obtained from court orders and settlements last year is a significant drop from the totals it reported in past years. The last time the SEC’s enforcement yield came in under $2 billion it was amid the turmoil over how to respond to failing brokerages and banks during the financial crisis of 2008.
During the Biden administration, the agency averaged about $5.8 billion in penalties, representing both fines and the forfeiture of illegally earned profits.
The agency’s leaders say numbers don’t tell the whole story. “Enforcement actions and financial remedies are important measures of activity, but they are not the only or most telling measures,” SEC Chairman Paul Atkins said.
Congressional Democrats are preparing to dig into the agency’s enforcement record next year, when Sen. Elizabeth Warren (D., Mass.) is expected to take over her chamber’s banking committee. Warren on Tuesday criticized what she called a “precipitous drop” in enforcement activity, saying, “The new Democratic majority in Congress will closely scrutinize whether the Atkins SEC is protecting the American people.”
The SEC under Atkins renounced some of the enforcement actions brought during the Biden administration, including a series of lawsuits against cryptocurrency platforms.
Former Chair Gary Gensler maintained that most crypto assets were securities whose sellers flouted investor-protection laws. Atkins has said the SEC tried to use enforcement to regulate the industry, rather than tailoring its decades-old rules to crypto’s unique market structure.
The SEC dropped most of its crypto lawsuits last year and dismissed cases against former executives, such as Nikola founder Trevor Milton and Ozy Media co-founder Carlos Watson, who were pardoned or had their sentences commuted by President Trump.
Wall Street was furious about rising fines levied during Gensler’s era. Big banks such as JPMorgan, Goldman Sachs and others paid hundreds of millions of dollars to settle SEC investigations over their traders’ use of messaging applications that broke record-keeping rules.
The SEC has continued bringing enforcement actions in its traditional focus areas, which include insider trading and fundraising fraud. In May, it sued 21 people involved in an alleged insider trading ring that exploited tips from a mergers-and-acquisitions lawyer who funneled lucrative secrets to his friends.
Write to Dave Michaels at dave.michaels@wsj.com
