On October 11, 2016, the SEC announced its enforcement results for the fiscal year which ended on September 30, 2016. A total of 868 enforcement actions were filed, which set a new record for the most actions in a single year. The SEC filed 61 more actions in 2016 than in 2015, representing a year-over-year increase of almost 7.6 percent. The actions resulted in total disgorgements and penalties of over $4 billion, down slightly from last year’s $4.19 billion.
Of particular interest to retailers, the press release noted that areas of increased regulatory focus include financial fraud, public company disclosure, accounting and auditing and the Foreign Corrupt Practices Act (“FCPA”). A record number of actions were filed under the FCPA. The SEC also continued its focus on insider trading, bringing insider trading charges against 78 parties.
The enforcement results also demonstrated more robust whistleblower protection. In addition to filing the first stand-alone action for retaliation against a whistleblower, the SEC distributed a record amount of $57 million to 13 whistleblowers. This is more money than has been awarded under the whistleblower program in all the previous years combined.
The SEC has increased its use of data analytics to identify misconduct and enhance its ability to conduct investigations and bring actions. This reliance on data for more effective detection, coupled with trends of strong enforcement, suggests that the pattern of higher numbers of enforcement actions will continue in the new fiscal year. The results also note the unprecedented breadth of actions that have been filed, touching on various areas of securities laws. Companies should remain vigilant about compliance, and be mindful that there may be increased risk, even in areas that traditionally may not have been targets of enforcement.