SEC Sets New Record in Enforcement Actions on Advisers-- up by nearly a third, B-Ds by 60%

In an article for InvestmentNews.com, November 9th., 2011, Mark Schoeff Jr. writes that the Securities and Exchange Commission (SEC) engaged in an unprecedented crackdown on investment advisers over the last year, contributing to an overall surge in agency enforcement.

The SEC announced that it filed 146 enforcement actions against investment advisers and investment companies during the 2011 fiscal year, which ended Sept. 30. That number represents a 30% increase over the previous fiscal year and a nearly 200% increase since 2002, when the SEC filed 52 cases. The SEC took 112 enforcement actions against broker-dealers, a 60% boost from fiscal year 2010. Overall, the SEC filed 735 enforcement actions, also a record number. The cases resulted in disgorgements and penalties totaling $2.806 billion writes Schoeff.

The enforcement arm of the SEC can now more effectively pursue nefarious activities involving complex products and practices, such as those that contributed to the financial crisis, the agency asserts.

The InvestmentNews.com article states that the agency credited the increased activity to a reorganization of its Enforcement Division. The overhaul included reforming the tips and complaints process and establishing specialized units that allow the division to operate more like a prosecutor's office.

“We continue to build an unmatched record of holding wrongdoers accountable and returning money to harmed investors,” SEC Chairman Mary Schapiro said in a statement.

SEC ‘s enforcement results release follows a similar announcement last month by the North American Securities Administrators Association Inc. The group said that state regulators reported a 51% increase in enforcement actions that led to $14.1 billion being returned to investors.

The SEC highlighted three investment adviser and broker dealer cases. One was an action against affiliates of The Charles Schwab Corp. for allegedly misleading investors about mutual funds that were laden with mortgage-backed securities. Another centered on AXA Rosenberg Group LLC and its founder, Barr Rosenberg, who was accused of papering over an error in an asset-management computer model. The third involved Merrill Lynch Pierce Fenner & Smith Inc.'s purportedly misusing customer information for proprietary trading and surreptitiously charging trading fees. The agency said that the Schwab paid more than $118 million to settle, while AXA Rosenberg ponied up $217 million for investor losses as well as a $25 million penalty.

The SEC also took 15 actions against executives involved in the financial crisis during fiscal year 2011. In the last two and a half years, the agency said, it has filed 36 separate actions against 81 defendants resulting in $1.97 billion in disgorgement.

Securities Attorney, Lars Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you or a family member have sustained a loss through financial fraud, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses. To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.