The Securities and Exchange Commission estimated disgorgement and penalties to be around $4 billion in the fiscal year 2018 from 821 enforcement actions. This was reported by the enforcement division of the agency.
2018’s disgorgement and penalties have gone up from the previous year which was $3.7 billion from 754 actions. Jay Clayton, the Chairman of SEC, said in a statement that the efforts of the Enforcement Division for deterring bad conduct has always been successful and it always protects the investors.
In fiscal year 2018, single case was responsible for higher disgorgement and penalties. Petroleo Brasileiro SA, an oil company, paid $933 million for disgorgement and $853 million as penalty for settling a foreign bribery case. This amounted to half of the annual haul of the SEC.
The Brazilian authorities’ Justice Department announced the settlement and a class action lawsuit as well. If the company fulfills its obligations to other authorities, then it will be expected to pay only $85.3 million as reported by the SEC.
In a report, the SEC said that a 2017 decision of the Supreme Court hindered the ability of reclaiming funds from the bad actors. The decision in Kokesh v. SEC case held that the agency had a five year limitation period for pursuing disgorgement and penalty claims as per the limitation law. This doesn’t seem to work in the favor of the agency. As per this rule, the SEC would be forced to forgo around $900 million from the pending cases.
The SEC had to return around $794 million in the fiscal year 2018 to the investors that were harmed, which is less than $1.07 billion that was paid in the previous fiscal year.
Source: Reuters, Best Latest News
