SEC Reports an Increase in Enforcement Actions


The Securities and Exchange Commission has ramped up enforcement actions against investment advisors, broker-dealers and senior executives over the past two years, the agency said in a statement. SEC Chairman Mary Shapiro attributed the increased activity in part to a reorganization that includes special units staffed by experts in the complex financial products and transactions that have been developed.

The SEC filed 734 enforcement actions in the fiscal year ended September 30, 2012, including 147 enforcement actions against investment advisors and 134 against brokers, compared with 735 total enforcement actions, 146 actions against investment advisors and 108 actions against brokers in 2011. The SEC recovered over $3 billion in penalties and disgorgements in FY 2012, compared with $2.9 billion in FY 2011.

As examples of its success, the SEC pointed to two cases against UBS Financial Services of Puerto Rico and two of its executives for disclosure violations in connection with sales of closed-end mutual funds, and OppenheimerFunds, which allegedly misled investors in two funds that suffered substantial declines during the financial crisis (“SEC cracking down on investment advisers,” by Mark Schoeff, Jr., InvestmentNews). The SEC recovered over $26 million from UBS and $35 million from Oppenheimer in settlements, according to the article.

The SEC had only mixed success recently in its enforcement case against the managers of the infamous Reserve Primary Fund, the $62 billion money market fund that “broke the buck” when Lehman Brothers imploded in 2008. The jury decided that the company was guilty of fraud, but that co-manager Bruce Bent II was only guilty of negligence.

Sadly, harmed investors are rarely, if ever, made whole as a result of a successful SEC enforcement action. The path for aggrieved investors with meritorious claims against an investment firm or investment professional is private litigation in arbitration or court, as the case may require.

Most law firms that represent investors offer a free case evaluation and, if the recommendation is to proceed, a variety of fee arrangements, including a contingent fee based upon a percentage of any successful recovery.

Cases arising out of the financial crisis of 2008 and 2009 may be reaching the end of their statutes of limitation. Investors who have suffered significant losses should contact an attorney with experience in handling such matters.

Page Perry is an Atlanta-based law firm with over 170 years of collective experience maintaining integrity in the investment markets and protecting investor rights.