On November 22, the Securities and Exchange Commission announced its enforcement results for the 2024 fiscal year with a record $8.2 billion in financial remedies.[1]  At the same time, a few cases and sweeps comprised the vast bulk of that amount, and the number of cases brought dropped by 26%.  In a press release announcing the results, Acting Enforcement Director Sanjay Wadhwa touted the agency’s “high impact enforcement actions” and noted “stepped up efforts” by market participants to self-report their own potential wrongdoing, cooperate in SEC investigations, and remediate any shortcomings.  Chair Gary Gensler, who recently announced he will step down at the start of the next Trump presidency, described the Enforcement Division as a “steadfast cop on the beat.”  Set forth below are key highlights on enforcement trends from the past year, as well as predictions for what the next year may hold under a new administration.

Continue Reading SEC FY 2024 Enforcement Results: Record Dollars But Many Fewer Cases

On November 14, 2024, the U.S. Department of Justice (“DOJ”) Antitrust Division (the “Division”) released guidance for the Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations (the “Guidance”). The Guidance will be used by the Division in assessing the adequacy and effectiveness of a company’s antitrust compliance program when making a charging or resolution decision.[1]

Continue Reading DOJ Antitrust Creates Guidance for Evaluating Antitrust Compliance Programs

On October 22, 2024, the SEC announced settled enforcement actions charging four companies with making materially misleading disclosures regarding cybersecurity risks and intrusions. These cases mark the first to bring charges against companies who were downstream victims of the well-known cyber-attack on software company SolarWinds. The four companies were providers of IT services and digital communications products and settled the charges for amounts ranging from $990,000 to $4 million.

Continue Reading SEC Charges Four Companies Impacted by Data Breach with Misleading Cyber Disclosures

On October 25, 2024, the Securities and Exchange Commission (“SEC”) adopted amendments to certain rules in the Covered Clearing Agency Standards (the “Amendments”) aimed at improving risk management and resilience of covered clearing agencies (“CCAs”).  Although not directly relevant to firms who are participants in one of the clearing agencies, the amendments could result in changes to margin requirements imposed by clearing agencies.  The Amendments:

Continue Reading Clearing Agency Participants Take Note: Covered Clearing Agency Resilience Rules Could Bring New Margin Requirements

The U.S. Securities and Exchange Commission (“SEC”) Division of Examinations (the “Division”) released its 2025 examination priorities on October 21, 2024 (the “2025 Priorities”).  The 2025 Priorities highlight a wide range of topics for entities subject to SEC examinations, particularly investment advisers and broker-dealers.  The topics should be very familiar, as they largely continue recent focus areas for not only the Examinations Division but also the Enforcement Division.

Continue Reading SEC 2025 Exam Priorities: Private Funds, Cyber, Crypto, and New Rule Compliance

September 23, 2024, Principal Deputy Assistant Attorney General Nicole M. Argentieri announced revisions to the Department of Justice (“DOJ”), Criminal Division’s compliance guidance, known as the Evaluation of Corporate Compliance Programs (“ECCP”), which is used by DOJ prosecutors to assess the effectiveness of a company’s compliance program in the context of a corporate investigation.[1]  The updated compliance guidance incorporates changes that will focus on a company’s use of Artificial Intelligence (“AI”)[2] and other technologies, its use of data analytics as part of the compliance function, the incorporation of “lessons learned” to continuously enhance corporate compliance programs, and whistleblower reporting.[3] 

Continue Reading DOJ Announces Revisions to Compliance Guidance Focused on AI, Whistleblower Reporting, and Other Areas

On September 18, 2024, the Securities Exchange Commission (“SEC”) unanimously adopted new rules amending Regulation NMS (the “Amendments”). The Amendments (1) establish new minimum pricing increments (or “tick sizes”) for certain stocks priced above $1.00, (2) establish a new maximum fee for access to quotations, and require that all such fees be calculable as of the transaction date, and (3) accelerate the implementation of operational amendments to the “round lot” and “odd-lot information” definitions previously adopted to harmonize with the adopted NMS amendments.

Continue Reading The Next Market Structure Rule Arrives: SEC Adopts New Minimum Pricing Increments and Access Fee Caps

In the past few weeks, the Securities and Exchange Commission (“SEC”) has announced three settled enforcement actions alleging violations of the internal controls provisions of the federal securities laws.  The cases are notable less for the SEC penalties involved—which ranged from no penalty to $400,000—but rather for the other, more dire consequences the companies experienced as a result of internal controls failures, such as financial restatements, delayed SEC filings that led to an exchange delisting, and serious employee misconduct that went unchecked.  The cases underscore the importance of establishing and maintaining effective systems of internal control over financial reporting. 

Continue Reading Trio of SEC Enforcement Actions Underscores Importance of Internal Controls, Including in M&A Context

Last week brought Securities and Exchange Commission (“SEC”) enforcement developments that, in our view, demonstrate the SEC’s interest in pursuing cases against investment advisers for conduct that would have been restricted under the Private Fund Adviser Rules (“PFAR”) and that the SEC stated in the PFAR adopting release was inconsistent with advisers’ fiduciary obligations.  As expected – and as previewed in our Client Alert on the Fifth Circuit’s decision in June – the SEC clearly still intends to act on the same concerns it raised in PFAR and will use its examination and enforcement tools to scrutinize the same adviser practices that drove the rulemaking.

Continue Reading SEC Enforcement Updates – Post-PFAR Developments

There were significant developments last week in two recent criminal enforcement initiatives that were first announced earlier this year.  First, the Department of Justice (“DOJ”) outlined the details of its long-anticipated whistleblower bounty program.[1]  Second, on July 30, 2024, President Biden signed into law a number of amendments to the Foreign Extortion Prevention Act (“FEPA”).[2]  Both of these developments underscore the importance of investing in robust compliance programs and conducting timely investigations of potential misconduct.

Continue Reading Two Enforcement Developments: DOJ Launches Whistleblower Awards Pilot Program and Amendments to the Foreign Extortion Prevention Act Are Passed into Law