Select Broker-Dealer, Investment Adviser, and Investment Company Enforcement Cases and Developments: 2012 Year in Review


This Outline highlights key U.S. Securities and Exchange Commission (the "SEC" or the "Commission") and Financial Industry Regulatory Authority ("FINRA") enforcement developments and cases regarding broker-dealers during 2012.

The SEC again brought a high number of enforcement actions in FY 2012. Down just one case from FY 2011's record, the Commission filed 734 enforcement actions last year. Senior SEC officials credit the reorganization and reforms put in place in the Division of Enforcement over the last few years for the near record, while at the same time noting that the actions represent increasingly complex and diverse cases. In FY 2012, the SEC also obtained orders requiring the payment of $3 billion in penalties and disgorgement, an 11% increase from the amounts ordered in FY 2011. In sum, the metrics used to measure the SEC's enforcement activity clearly demonstrate that the Commission continues to aggressively enforce the securities laws. At the same time, the Commission and some of its critics both called for even more aggressive measures and legislative changes to enhance the SEC's penalty authority.

In addition to the high number of cases brought last year, perhaps the other big headline at the SEC was the significant personnel departures after the reelection of President Barack Obama. Chairman Mary Schapiro announced that she was leaving the agency in November; then-Commissioner Elisse Walter was appointed the new Chair. Ms. Schapiro's leaving was promptly followed by announcements that the Directors of the Division of Corporation Finance and the Division of Trading and Markets, the SEC's General Counsel and Chief of Staff were all departing the Commission. In early January 2013, the Director of the Division of Enforcement also announced his exit from the agency. As this Outline went to press, President Obama announced that he was nominating Mary Jo White to become the next Chair of the Commission; some view this as a signal that the SEC will continue to aggressively enforce the securities laws. This year will be a year of change at the Commission with a new Chair and senior staff appointed to fill these vacancies.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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