SEC more than doubles muni enforcement filings in FY 2024 – Bond Buyer
The Securities and Exchange Commission brought forth more than double the number of municipal market enforcement filings in fiscal year 2024 compared to fiscal 2023. This increase was part of a year that saw a total of 583 enforcement actions and a record-breaking $8.2 billion in financial remedies ordered.
Despite the significant financial remedies, the total number of enforcement actions decreased by 26% compared to the previous year. In 2024, there were notable declines in enforcement actions across different types of cases, including “stand-alone,” “follow-on,” and cases against issuers who were reportedly delinquent in submitting required filings to the SEC.
SEC Chair Gary Gensler emphasized, “The Division of Enforcement is committed to upholding the law and holding wrongdoers accountable, promoting the integrity of our capital markets for the benefit of investors and issuers.”
The Public Finance Abuse Unit, which deals with municipal market cases, initiated 14 cases in FY 2024, a significant increase from the six cases in the prior year.
The $8.2 billion in financial remedies ordered by the SEC included $6.1 billion in disgorgement, the highest amount on record, and $2.1 billion in prejudgment interest, the second-highest amount on record. A large portion of these financial remedies, 56%, stemmed from Terraform Labs and Do Kwon, who were involved in one of the largest securities frauds in U.S. history.
In addition to these high-profile cases, the SEC attributed the increase in filings to enhanced cooperation from market participants across the board, from public companies to broker-dealers and advisory firms. Market participants have increasingly self-reported, remediated, and cooperated with investigations, promoting a culture of compliance.
Moreover, fiscal 2024 marked the first instances of the SEC charging recordkeeping violations against municipal advisors. Several firms found in violation were censured, ordered to cease and desist from future violations, and faced civil penalties for breaches of recordkeeping provisions under the Securities Exchange Act and the rules of the Municipal Securities Rulemaking Board.
Rebecca Olsen, Deputy Chief of the SEC’s Division of Enforcement Public Finance Abuse Unit, emphasized the critical role of books and records requirements in ensuring compliance with federal securities laws among municipal advisors.
Apart from financial remedies and recordkeeping violations, the SEC experienced a notable year in terms of enforcement actions. In FY 2024, the Commission secured orders barring 124 individuals from serving as officers and directors of public companies, the second-highest number of such bars in a decade. The SEC also received a record number of tips, complaints, and referrals, including over 24,000 whistleblower tips, demonstrating a vigilant approach to maintaining investor trust in the markets.
Acting Deputy Director of the Division of Enforcement, Sam Waldon, acknowledged the commitment of the SEC staff in keeping pace with evolving threats and enforcing regulations. He expressed pride in the dedicated team working tirelessly to uphold accountability, promote compliance, and foster investor trust in the markets.
