SEC Enforcement Record Stems From More Penalties, Not More Cases

The record-setting penalties that the SEC issued in 2022 will be used as precedent by commission lawyers when determining the size of penalties in 2023 and future years. The SEC may well also feel pressure to beat its 2022 results, despite cautioning in its press release that it does not expect to “set new [records] each year.”

However, the SEC received a $210 million boost in its FY 2023 budget that will, among other things, fund new hiring in the enforcement division. It will naturally be pressured to show taxpayers that this was a wise investment.

While companies will presumably, and should, respond to the SEC’s banner year in 2022 by making additional investments in compliance, those improvements will take time to have any effect. There is no such thing as a perfect compliance program, and shortcomings are inevitable, especially given how complicated our financial system has become.

But when mistakes are made, companies will pay dearly for them.

Source: SEC Enforcement Record Stems From More Penalties, Not More Cases