By Kristen Hughes, Baker Tilly
In November 2021, the Securities and Exchange Commission’s Division of Enforcement (the Division of SEC) published its annual report for 2021. The annual report was presented as a press release, whereas in prior years it was published as a sizeable brochure. While shorter than previous annual reports, the press release is also supported by an addendum which indexes every action filed through the year.
During the year, the Division filed 697 enforcements, including 434 new enforcement actions (representing a 7% increase over the prior year) and 120 actions against issuers who were delinquent in required SEC filings. Overall, this represented a 3% decrease in total actions filed the prior year. The filings represented a range of matters, including emerging issues in the cryptocurrency and special purpose acquisition companies (SPAC) spaces. There was a 33% decrease in disgorgement awards since the prior year ($2.396 million in 2021 compared to $3.589 million in 2020) and a 33% increase in penalties ($1.456 million in 2021 compared to $1.091 million in 2020). The year was also record-breaking for awards relating to whistleblowers, with $564 million being awarded to 108 whistleblowers.
The Division sought a number of enforcement actions in the following key priority areas:
- Holding individuals accountable;
- Ensuring gatekeepers live up to their obligations;
- Rooting out misconduct in crypto;
- Policing financial fraud and issuer disclosure;
- Charging improper conduct by investment professionals;
- Protecting market integrity;
- Cracking down on insider trading and market manipulation;
- Enforcing the foreign corrupt practices act;
- Guarding against public finance abuse; and
- Pursuing wrongdoing in securities offerings.
The annual report also identifies that the Division filed a number of first ever enforcement actions across emerging areas, which highlighted the following cases and key takeaways outlined by the Division Director, Gurbir S. Grewal: