SEC Bags Almost $4 Billion in Fines for Fiscal 2018

Most disgorgement payments came from the Petróleo Brasileiro SA case.

The Securities and Exchange Commission seized a collective $3.95 billion in enforced penalties and assets that were returned to its investors in fiscal 2018, up 4.2% from the previous year’s $3.79 billion.

In the year ended September 30, the government regulator saw 821 enforcement actions, almost 100 higher than the previous year’s 747, and returned $794 million to disgorgements, or investors who had been burned by perps, less than fiscal 2017’s record $1.07 billion.

Most of the high-level disgorgement and penalties came from a single case surrounding Brazilian oil company Petróleo Brasileiro SA on grounds of foreign bribery and a bid-rigging scheme. In September, the corporation said it would pay an $853 million penalty and another $933 million in disgorgement and prejudgment interest as settlement.

The SEC is expecting to receive only $85.3 million if Petróleo meets its obligations to the Justice Department, Brazilian authorities, and a class-action lawsuit regarding the issue.

Jay Clayton, the agency’s chairman, praised the enforcement division and its continued success “in its efforts to deter bad conduct and effectively remedy harms to investors.”

Of the enforcement calls, 490 of them were standalone actions. About 63% of the standalone cases were investment advisory issues, securities offerings, and issuer reporting/accounting and auditing related. Market manipulation, insider trading, and broker-dealer misconduct comprised about 10% each for the standalones.

“As stewards of the SEC’s Division of Enforcement, our goal is to continue to protect investors, deter misconduct, punish wrongdoers, and keep our markets the safest and strongest in the world,” said Stephanie Avakian, the division’s co-director.

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