On November 17, 2014, the SEC released its 2014 Agency Financial Report (AFR), which provides financial and high-level performance results that allow the President, Congress and the public to understand the SEC’s financial picture and accomplishments during the last year.
In the AFR, the SEC described how it carried out its mission to protect investors, foster capital formation and promote fair, orderly and efficient markets. To do so, it outlined several areas that the SEC focused on in the 2014 fiscal year. Review the 2014 AFR.
Among a number of SEC undertakings discussed in the AFR, the SEC noted that it brought a record number of enforcement actions over the last year. These enforcement actions included prosecuting companies and executives for accounting and financial fraud, as well as for violations of insider trading laws.
The SEC’s Enforcement Division also, for the first time, brought enforcement actions for violations of the market access rule and to halt a fraudulent municipal bond offering, and instituted the largest penalty for net capital rule violations. The first action was also brought that applied the Dodd-Frank Wall Street Reform Act’s (the Dodd-Frank Act) whistleblower anti-retaliation provision.
The SEC also stated that during the last year it proposed and finalized many rules required under the Dodd-Frank Act and Jumpstart Our Business Startups Act (the JOBS Act).
Under the Dodd-Frank Act, the SEC completed new rules regarding the regulation of proprietary trading, derivatives, asset-backed securities and credit ratings.
Under the JOBS Act, the SEC proposed new rules to facilitate crowdfunding and securities offerings up to $5 million within a 12-month period. The SEC also adopted new rules on money market funds.
In addition, the SEC highlighted the Office of Compliance Inspections and Examination’s (OCIE) efforts to promote compliance and to detect and prevent fraud through their examination process.
OCIE engaged with registrants by publishing its annual public statement of examination priorities, as well as holding meetings with their senior management, heads of control functions and independent directors. OCIE also uncovered fraud and suspicious activities by refining risk-based targeting methodologies, expanding the scope of its data collection and improving in-house expertise in key areas.
Further, the SEC stated that it focused on coordinating international approaches to key regulatory areas through its Office of International Affairs. In addition, through its work with the International Organization of Securities Commissions (IOSCO), the Financial Stability Board (FSB) and the OTC Derivatives Regulators group, among others, the SEC strived to promote international convergence of regulatory standards and practices.
Office of Investor Advocate
The SEC also noted that it instituted its first Investor Advocate to lead the SEC’s new Office of the Investor Advocate, which was established by the Dodd-Frank Act. This office is charged with, among other things, analyzing the potential impact on investors of regulations and rules that are proposed by the SEC and self-regulatory organizations (SROs), as well as identifying areas in which investors would benefit from changes in regulations or SRO rules.
2015 fiscal year
In addition to highlighting its accomplishments from the past year, the SEC also discussed objectives for the year ahead. These include completing the remaining major rulemaking required under the Dodd-Frank and JOBS Acts. The SEC also plans to address whether market structure rules continue to meet the SEC’s objectives of investor protection and fair and orderly markets. The SEC will also build upon its enforcement and examination programs using advanced data analysis methodologies and technology. Additionally, the SEC stated that it will look for new ways to educate investors, including through increased investor education outreach to target audiences.