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SEC Files Record Number of Enforcement Actions


In the fiscal year ended Sept. 30, the commission says that it filed a total of 755 enforcement actions, an all-time high, and secured $4.16 billion in penalties and disgorgements, according to a preliminary analysis.

That compares to 686 actions in fiscal 2013 that amounted to $3.4 billion in disgorgements and penalties, an increase that SEC Chairwoman Mary Jo White attributes in part to a greater reliance on technology to ferret out bad behavior in the industry, even as the commission has been struggling to secure more resources to beef up its enforcement operations.

"The innovative use of technology -- enhanced use of data and quantitative analysis -- was instrumental in detecting misconduct and contributed to the Enforcement Division's success in bringing quality actions that resulted in stiff monetary sanctions," White says in a statement.

When White, a former federal prosecutor, took the reins at the SEC, she spoke often of the need for a stronger enforcement apparatus, sending a signal to the industry that SEC examiners would bring closer scrutiny to the industry and wouldn't overlook even the smallest offenses. The new figures show that regulators are holding the industry to account for a wide variety of violations.

The commission tagged three advisory firms in the past year for sufficient controls relating to the custody of assets, and brought a fraud case against a private equity firm involving the allocation of fees and expenses to the firm's funds.

Taken together, the record number of actions the commission has brought this year send a message that White's SEC has been able to ramp up enforcement activity, suggesting that advisors should take a closer look at their compliance programs, says David Tittsworth, president and CEO of the Investment Adviser Association.

"Even a casual observer can figure out that Chairwoman Mary Jo White is continuing to make enforcement her primary priority at the SEC," Tittsworth wrote in an email. "There is really only one reasonable course of action for investment advisory firms and investment companies -- make sure that you have a robust and dynamic compliance program in place and avoid even gray areas."

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