The Securities and Exchange Commission Collected more than $6.4 Billion in 2022
According to Financial Advisor IQ, the Securities and Exchange Commission (SEC) had a record year in 2022 for enforcement actions which included advisor misconduct and digital communications among others.
The agency reportedly collected more than $6.4 billion in civil penalties and disgorgement fines during its 2022 fiscal year, which ended Sept. 30, an increase of $2.58 billion from the prior one-year period and the highest annual total on record.
Of the $6.4 billion total, penalties reportedly represented $4.2 billion, or about two-thirds of the money to be paid, according to the article.
Cybersecurity and Digital Communications
The SEC fined 16 broker-dealers and investment advisory units for failing to maintain records of digital communications sent from employees’ personal devices. In all, such penalties totaled $1.1 billion. Further, there was $710 million in penalties from the Commodity Futures Trading Commission for linked communications by senior employees over unapproved channels, such as WhatsApp or Signal, according to the article.
Barclays Capital, Citigroup Global Markets, Credit Suisse, Goldman Sachs, Morgan Stanley, UBS, and Deutsche Bank Securities, DWS Distributors and DWS Investment Management Americas each agreed to pay penalties of $200 million each for communications failures. Bank of America Merrill Lynch also agreed to pay $225 million to settle charges with both regulators for communications failures.
The SEC also brought enforcement actions against JPMorgan, UBS, TradeStation Securities and Morgan Stanley Smith Barney for failing to have sufficient procedures to protect investors’ personal information, in violation of the SEC’s Identity Theft Red Flags Rule.
Advisor misconduct targeted by the agency included cherry-picking schemes, a practice of allocating preferential trades to an advisor’s own portfolio at the expense of their clients’ accounts.
In one case, the SEC charged Richard Keith Robertson, formerly of IFP Advisors for cherry-picking trades over a nine-year period, according to the article.
Robertson reportedly agreed to the sanctions, paying nearly $900,000 in penalties and disgorgement, without admitting or denying these findings. IFP agreed to pay a penalty of $400,000 for failing to reasonably supervise Robertson, without admitting or denying these findings.
According to the article, in September, advisor Scott Adam Brander and his former employer, Buckman Advisory Group, settled over similar charges for $1.2 million and $400,000, respectively.
UBS Financial Services also agreed to pay nearly $25 million to settle fraud charges in connection with its Yield Enhancement Strategy, (YES Strategy). The SEC fined the firm for not adequately training advisors on the various risks of the options-based trading program, resulting in huge losses to clients. See: UBS Settles Fraud Charges over YES Options Trading Strategy
The regulator began enforcing the Regulation Best Interest rule in 2022 — referred to as Reg BI, beginning with Western International Securities and five of its representatives. As we reported, the firm and reps were charged with recommending and selling high-risk GWG L Bonds to retail customers without a reasonable basis to believe the bonds were in their “customers’ best interests.”
To learn more, see about our investigation on GWG L Bonds please see: GWG Holdings * GWG L Bonds * Investor Lawsuits for Recovery
Further, Loop Capital Markets was charged under the Violating Municipal Advisor Registration Rule, for advising a municipal entity without registering as a municipal advisor, according to the article.
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The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Seattle, Washington. For more information, please visit our website, www.whitesecuritieslaw.com.
Tags: Bank of America, Barclays Capital, Buckman Advisory Group, Cherry picking, Citigroup Global Markets, Credit Suisse, Deutsche Bank Securities, DWS Distributors, DWS Investment Management Americas, Goldman Sachs, GWG L Bonds fraud, IFP, JPMorgan, Loop Capital Markets, Merrill Lynch, Morgan Stanley, Reg bi, Richard Keith Robertson, Scott Adam Brander, SEC enforcement 2022, TradeStation Securities, UBS, UBS Yes, violating municipal advisor registration rule, Western International Last modified: January 10, 2023