The SEC Announces Enforcement Results for Fiscal Year 2024

On November 22, 2024, the Securities and Exchange Commission announced that it filed 583 total enforcement actions in fiscal year 2024 while obtaining orders for $8.2 billion in financial remedies, the highest amount in SEC history.

The 583 enforcement actions represent a 26 percent decline in total enforcement actions compared to fiscal year 2023. Of those cases, the Commission filed 431 “stand-alone” actions, which was 14 percent less than in the prior fiscal year; 93 “follow-on” administrative proceedings seeking to bar or suspend individuals from certain functions in the securities markets based on criminal convictions, civil injunctions, or other orders, which was 43 percent less than the prior fiscal year; and 59 actions against issuers who were allegedly delinquent in making required filings with the SEC, which represented a decrease of 51 percent.

The $8.2 billion in financial remedies consisted of $6.1 billion in disgorgement and prejudgment interest, also the highest amount on record, and $2.1 billion in civil penalties, the second-highest amount on record. Approximately 56 percent of the $8.2 billion financial remedies ordered is attributable to a monetary judgment obtained following the SEC’s jury trial win against Terraform Labs and Do Kwon, who were charged with one of the largest securities frauds in U.S. history.

In addition, in fiscal year 2024, the SEC obtained orders barring 124 individuals from serving as officers and directors of public companies, the second-highest number of such bars obtained in a decade.

In fiscal year 2024, the SEC distributed $345 million to harmed investors, marking more than $2.7 billion returned to investors since the start of fiscal year 2021. The SEC also received 45,130 tips, complaints, and referrals in fiscal year 2024, the most ever received in one year, including more than 24,000 whistleblower tips, more than 14,000 of which were submitted by two individuals. The SEC issued whistleblower awards totaling $255 million.

Major Fraud

In fiscal year 2024, the Division continued to focus on holding individuals and entities accountable for preying on investors.

• The Division’s investigations led to charges alleging frauds ranging from Ponzi schemes targeting specific communities to billion-dollar frauds with thousands of victims;
• The SEC charged Xue Lee (aka Sam Lee) and Brenda Chunga (aka Bitcoin Beautee) for their involvement in an allegedly fraudulent crypto asset pyramid scheme known as HyperFund that raised more than $1.7 billion from investors worldwide;
• The SEC charged Cynthia and Eddy Petion and their company, NovaTech Ltd., for allegedly operating a fraudulent scheme that raised more than $650 million in crypto assets from more than 200,000 investors worldwide;
• The SEC charged five unregistered brokers and their companies in connection with an alleged pre-IPO fraud scheme that raised at least $528 million from more than 4,000 investors around the world; and
• The SEC charged Abraham Shafi, the founder and former CEO of Get Together Inc., a privately held social media startup known as “IRL,” for raising approximately $170 million from investors by allegedly fraudulently portraying IRL as a viral social media platform that organically attracted the vast majority of its purported 12 million users.

Gatekeepers

In fiscal year 2024, the Division investigated wide-ranging violations by gatekeepers, resulting in, among other actions, the above-mentioned charges against audit firm BF Borgers for a massive fraud affecting more than 1,500 SEC filings – one of the largest ever wholesale failures by a gatekeeper – and settled charges against audit firm Prager Metis for hundreds of auditor independence violations.

Public Company Misstatements

It is foundational to the proper operation of the securities markets that public companies provide materially accurate information to investors. In fiscal year 2024, the Division investigated misstatements by public companies leading to a number of enforcement actions, including:

• Settled charges against Cassava Sciences for misleading statements about the results of a Phase 2 clinical trial for its purported therapeutic for the treatment of Alzheimer’s disease;
• Settled charges against Ideanomics for misleading statements about the company’s financial performance; and
• Charges against former executives of Kubient for their alleged roles in a scheme in which the company allegedly overstated and misrepresented its revenue in connection with public stock offerings.

A full summary of the changes, recommendations and enforcement actions taken by the SEC during fiscal year 2024, can be found at the following link:

https://www.sec.gov/newsroom/press-releases/2024-186 

To speak with a Securities Attorney, please contact Brenda Hamilton at 200 E Palmetto Park Rd, Suite 103, Boca Raton, Florida, (561) 416-8956, or by email at [email protected]. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as and does not constitute legal advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.

Hamilton & Associates | Securities Attorneys
Brenda Hamilton, Securities Attorney
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