The SEC's net haul from enforcement cases tapered off in its latest fiscal year even as the number of legal cases it brought against advisors, brokers and others increased.
Speaking on Wednesday at the Securities Enforcement Forum in Washington, D.C., Securities and Exchange Commission Chairman Gary Gensler said the agency brought in roughly $5 billion in its 2023 fiscal year, which ended on Sept. 30. That was below
Gensler drew particular attention to the series of allegations the SEC has brought over recordkeeping violations — particularly for not keeping track of "off-channel" messages sent using WhatsApp and similar services. He said regulators have opened cases against 40 firms and ordered more than $1.5 billion in penalties over these sorts of violations since December 2021.
In the latest fiscal year, he said, settlements in these cases were reached with 23 firms.
"Our actions uncovered not only the widespread use of personal devices and non-official channels to discuss business, but a complete failure of financial firms to maintain or preserve those off-channel communications," Gensler said.
Gensler said the SEC often uses such high-profile enforcement actions to bring attention to "garner the attention of lawyers, compliance officers, and the like, far beyond this room."
"They help change behavior and bring greater compliance with the law," he said.
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The SEC is likely later to release further details of its 2023 enforcement record. On Wednesday, Gensler said the agency filed 780 enforcement actions, including 500 standalone cases, in its latest fiscal year. That was up slightly from the 760 cases filed in the previous year.
Gensler said he and other regulators pay particular attention to digital asset markets, which he deemed "a field rife with fraud, scams, bankruptcies and money laundering." He maintained his long-held position that most cryptocurrencies like bitcoin can be regulated under the SEC's existing regulatory powers.
Cryptocurrencies by and large, he said, are tantamount to investment contracts, "making them subject to the securities laws."
"Congress could have said in 1933 or in 1934 that the securities laws applied only to stocks and bonds," Gensler said. "Yet Congress included a long list of items in the definition of a security, including 'investment contract.'"
