SEC enforcement officials posted a record $4.7 billion in disgorgements and penalties in fiscal year 2020, the Securities and Exchange Commission reported Monday in its annual enforcement report for the period ending Sept. 30.
Parties charged by the SEC were ordered to disgorge $3.6 billion and pay penalties of $1.1 billion, an 8% increase from the previous fiscal year. More than $600 million was returned to harmed investors.
The fiscal year also saw a record for the SEC's whistleblower program, which awarded $175 million.
The agency's 715 enforcement actions covered a range of issues, including issuer disclosure, foreign bribery, market manipulation and insider trading. The number of actions fell 17% as agency officials adjusted to COVID-19 work restrictions.
Stephanie Avakian, SEC enforcement director, said in the report that one focus during the past year was accuracy in financial statements and issuer disclosures. Along with traditional sources for such cases, SEC enforcement officials also used risk-based analysis to identify potential violations, including earnings management practices that could be masking unexpectedly weak performances and disclosure of corporate perks.
The last year also saw creation of an office for collecting outstanding monetary judgments in district court and bankruptcy proceedings and returning money to harmed investors. One recent final distribution returned more than $1 billion and 100% of principal investments by institutional investors in WG Trading Investment's commodities trading pool that was supposed to provide alpha in an enhanced index equity strategy.
Ms. Avakian welcomed the Supreme Court's June decision in SEC vs. Liu affirming the authority of courts to order disgorgements, but noted that "it also imposed some limitations and left open some questions."
SEC enforcement officials may recommend higher penalties when its statutory authority allows, Ms. Avakian said.
