On November 15, 2022, the SEC announced its enforcement results for fiscal year 2022.  Despite the lingering impact of COVID 19, the SEC filed 760 enforcement actions and recovered a record $6.439 billion in penalties and disgorgement on behalf of investors. The number of enforcement actions increased nine percent from the previous fiscal year.

The SEC’s stand-alone enforcement actions addressed the gamut of conduct, ranging from first-of-their-kind proceedings to cases that alleged traditional securities law violations. The billions of dollars in penalties imposed by the SEC are intended to deter future violations, establish accountability for major institutions, and provide potential compliance roadmaps for other firms.

To deter future misconduct and enhance public accountability, the SEC in many cases ordered firms to hire compliance consultants to conduct comprehensive reviews of the firms’ policies and procedures relating to the retention of electronic communications found on personal devices.

In its announcement, the SEC cited its actions against JP Morgan Securities LLC, fifteen other broker-dealers, and one Registered Investment Adviser (RIA) that failed to maintain and preserve work-related text message communications transmitted on employees’ personal devices. The firms admitted their mistakes and acknowledged that their conduct violated the recordkeeping provisions of the federal securities laws.

Cases involving regulated entities and associated individuals

In fiscal year 2022, the SEC brought numerous cases against broker-dealers and RIAs, as well as the individuals associated with those firms. For example, the SEC brought an action against an RIA that recommended special purpose acquisition companies (SPACs) to clients but failed to disclose conflicts of interest arising from its personnel’s ownership of SPAC sponsors. In addition, the SEC brought charges to enforce Regulation Best Interest.

The SEC also brought actions related to abusive trading practices, such as insider trading, market manipulation, and cherry-picking. Those trading practices erode trust in the markets, undermine market integrity, and victimize investors.

In addition, the SEC charged multiple RIAs and their representatives with defrauding their clients by engaging in cherry-picking. These RIAs preferentially allocated profitable trades, or failed to allocate unprofitable trades, to their firm’s personal accounts to the detriment of clients’ accounts. The SEC also brought charges against four investment advisers for violating the SEC’s Pay-to-Play Rule by continuing to receive advisory fees from government entities after associates made contributions to elected officials or candidates for elected office.

Other important enforcement actions brought by the SEC

The SEC brought a significant number of enforcement actions in fiscal year 2022, including  failures by major firms to comply with their core obligations such as record-keeping and safeguarding customer information. These enforcement actions alleged that firms failed to implement adequate policies and procedures to protect investors from identity theft and to prevent violations of the Red Flags Rule (Regulation S-ID). Notably, the SEC charged Morgan Stanley Smith Barney with failing, over a five-year period, to protect the personal identifying information of approximately 15 million customers.

In the environmental, social, and governance (ESG) area, the SEC examined the materiality and accuracy of disclosures related to investment products and strategies. An action brought against BNY Mellon Investment Adviser, Inc. alleged that the firm made materially misleading statements and omissions about its consideration of ESG principles in making investment decisions for certain mutual funds.

During fiscal year 2022, the SEC brought a number of enforcement actions arising from the conduct by private fund advisers and associated individuals. For example, the SEC filed complaints against nine registered private fund advisers that failed to comply with the Custody Rule or update their Forms ADV to accurately reflect the status of their clients’ financial statements.

Benefits derived from data analytics, cooperation and whistleblower complaints.

The SEC uses a variety of technical and analytic tools to generate and advance its investigations. These tools help the SEC to hold violators of securities laws accountable. The SEC also relies on cooperation from firms and whistleblower complaints. Many enforcement actions originate from the Analysis and Detection Center of the SEC’s Market Abuse Unit. Data analytics help to detect suspicious trading patterns. Furthermore, the SEC’s Office of Market Intelligence reviewed and processed more than 38,500 tips, complaints, and referrals of possible securities law violations from the public, as well as self-regulatory organizations and others.

Assistance from cooperators can help to expedite the SEC’s investigations and uncover important evidence. When individuals and entities cooperate meaningfully, the SEC will consider that cooperation when it orders remedies. The SEC may limit the sanctions imposed if firms provide meaningful cooperation.

The SEC’s Office of the Whistleblower is a vital component of the Commission’s Enforcement Program. In fiscal year 2022, the SEC issued approximately $229 million in 103 awards. The Whistleblower Program also received more than 12,300 whistleblower tips, which was a record high number.


The threat of enforcement should make every investment adviser recognize the importance of implementing a robust compliance program. A thorough and effective compliance program can help advisory personnel act in the best interest of their clients.

Many of these enforcement cases convey the message that firms’ policies, procedures and practices must keep pace with technological developments. As new forms of communication are created, firms’ policies and procedures must evolve accordingly.

The SEC’s enforcement results are available here.


About RIA Compliance Group: RIA Compliance Group is an investment adviser compliance consulting firm based in Delray Beach, Florida. The firm’s mission is to provide affordable, timely, practical, and cost-effective compliance advice. We help investment advisers to comply with the myriad of state and SEC regulations and compliance obligations facing their firms. RIA Compliance Group takes pride in giving personal service and real world compliance advice, not theoretical concepts and legalese. The firm interacts on a daily basis with SEC and state securities regulators.

RIA Compliance Group, LLC – 701 SE 6th Ave, Suite 201, Delray Beach, FL 33483 – Tel: 561-600-0564 – sales@ria-compliance.com