SEC 2022 Enforcement Report highlights evolving areas of cryptocurrency, ESG and cybersecurity

By Kristen Hughes, Baker Tilly

In November 2022, the Securities and Exchange Commission’s (SEC) Division of Enforcement published its enforcement results for 2022. The annual report was presented as a press release and accompanying addendum which provides a statistics summary and indexes the actions filed through the year.

During the year, the Division filed 760 enforcements, including 462 new enforcement actions, 129 actions against issuers who were delinquent in required SEC filings and 169 follow-on administrative proceedings that sought to bar or suspend individuals from specific functions in the securities markets based on criminal convictions, civil injunctions, or other such orders. Overall, this represented a 9% increase in total actions filed compared to 2021.

There was a significant increase since prior year in monetary penalties ordered in SEC actions, totaling $6.439 billion, the most on record in SEC history. This included $4.194 billion in civil penalties and $2.245 billion in disgorgement. There were more than 12,300 whistleblower tips through the year, and the SEC issued approximately $229 million in 103 whistleblower awards, representing the second highest year on record in terms of dollar amounts and number of awards.

The Division sought a number of enforcement actions in the following priority areas:
  1. Financial fraud and issuer disclosure;
  2. Gatekeepers (auditors, lawyers, transfer agents) for failure to live up to their responsibility;
  3. Cryptocurrency;
  4. Cybersecurity and compliance;
  5. Environmental, social and governance (ESG);
  6. Private funds;
  7. Regulated entities and associated individuals;
  8. Market abuses;
  9. Complex products;
  10. Public finance abuse; and
  11. Foreign Corrupt Practices Act

The highest number of enforcement actions were brought in matters involving investment advisers/investment companies (23%), broker dealers (17%), delinquent filings (17%) and securities offerings (15%).