SEC and CFTC Sanctions Top $7 Billion in FY 2014


The SEC and CFTC both set records for the amount resulting from their enforcement actions in Fiscal Year 2014. Collectively, they received sanctions of more than $7 billion from a wide variety of misconduct in the securities industry.

The CFTC collected a record $3.27 billion in monetary sanctions during FY2014. The total consisted of $1.8 billion in civil monetary penalties and $1.4 billion in restitution and disgorgement, according to the press release yesterday from the Commodity Futures Trading Commission‘s about its annual enforcement results.

The SEC  obtained orders totaling $4.16 billion in disgorgement and penalties over the last year, according to preliminary data released in mid-October.  It also set a record for the number of enforcement actions it initiated during the year: 755.

Any other year, the numbers would be truly staggering. However, this has been quite the year for record settlements. Bank of America agreed to pay $16 billion and BNP Paribas $8.9 billion. Still, the growth in penalties has been impressive (from an enforcement standpoint) and scary (given that it signals greater corporate misconduct).

Here is a chart that shows the growth in sanctions in the securities industry over the past 15 years. The numbers include both civil monetary penalties and disgorgement on behalf of investors and other aggrieved parties.

Combined Sanctions (per year) in SEC and CFTC Enforcement Actions

[line_graph  scale_step_width=”10″ custom_color=” scale_steps=”1″ labels=”1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014″]#1abc9c,SEC and CFTC Sanctions, 1.016, .7665, .510, 1.441, 2.315, 3.401, 3.160, 3.746, 2.141, 1.630, 2.624, 3.036, 3.250, 4.031, 5.100, 7.430[/line_graph]

The growth in penalties is particularly interesting given that there hasn’t been a substantial increase in the number of enforcement actions initiated over the same time period:

[line_graph  scale_step_width=”100″ custom_color=” scale_steps=”10″ labels=”1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014″]#1abc9c,Enforcement Actions Initiated, 578, 556, 528, 638, 763, 722, 698, 612, 695, 711, 714, 732, 834, 836, 768, 822[/line_graph]

We’re going to take a closer look at the types of cases that the SEC and CFTC are bringing over the next few days to help whistleblowers get a better idea of the types of tips the regulatory bodies would be interested in hearing from insiders in the securities industry. The SEC and CFTC paid 10 whistleblowers over the last year for a total of approximately $35 million in rewards.

It was quite a year for both programs. The CFTC program issued its first reward in May. The SEC whistleblower program brought and settled its first case of retaliation against one of its informants. It also issued its largest award to date, $30 million to an international whistleblower in September. We’re looking forward to seeing the annual reports to Congress to learn more about the nature of the tips provided.