Wed, Jun 10, 2015
SEC Issues Record Monetary Sanctions in 2014 – up 35% from 2013
The U.S. Securities and Exchange Commission (SEC) issued monetary sanctions of over $4.6 billion in 2014, according to the 2015 Global Enforcement Review published today by Duff & Phelps' Kinetic Partners division. In compiling the annual report, Kinetic Partners analyzed publicly available data from financial services regulators across the U.S., UK and Hong Kong to determine regulatory trends and their effects on the financial services industry.
Kinetic Partners observed that there was a 35% increase in the total value of disgorgements and penalties by the SEC in 2014 – up from $3.4 billion in 2013. Other significant findings include:
“Actions against individuals are likely to play an increasingly integral role in regulators’ efforts to deter bad behavior,” said Julian Korek, Head of Compliance and Regulatory Consulting at Kinetic Partners, a Division of Duff & Phelps. “Such sanctions are an undeniably powerful deterrent as, unlike financial penalties imposed on firms, they cannot be written off as a business cost. Regulatory leadership recognizes that an organization’s senior management is not necessarily able to police staff at all levels, so holding the bad actors themselves accountable is a step towards influencing institutional culture in the right direction. However, there is also a real risk that the targeting of individuals could reduce the attractiveness of financial services as a career. As always, it is a balance that regulators need to strike.”
“2014 saw a significant spike in the severity of financial penalties virtually across the board, as regulators have been getting tougher on both firms and individuals,” commented Monique Melis, Managing Director and Global Head of Regulatory Consulting at Kinetic Partners, a Division of Duff & Phelps. “However, the averages only tell part of the story as they have been pushed up by a relatively small number of historic fines, mainly relating to Libor and Forex manipulation. We are now entering an era of regulatory enforcement in which the ‘new normal’ consists of exceptionally severe penalties and a growing focus on individual bad actors, the aim of which is to impact and change the culture of firms.”
The report also looked at trends in the UK and Hong Kong:
About Kinetic Partners
Kinetic Partners, a Division of Duff & Phelps, provides a full range of award-winning regulatory consulting, compliance consulting, risk advisory, due diligence, tax advisory, corporate recovery and forensic and dispute services to financial services clients who value their expert service delivery and unique approach. Established in 2005, they have built a multidisciplinary team of recognized experts drawn from regulators, financial institutions and leading professional services firms. They are a trusted advisor to over 1,300 clients across their offices in New York, London, Hong Kong, Cayman Islands, Channel Islands, Chicago, Dublin, Luxembourg, Singapore and Switzerland.
About Duff & Phelps
Duff & Phelps is the premier global valuation and corporate finance advisor with expertise in complex valuation, dispute and legal management consulting, M&A, restructuring, and compliance and regulatory consulting. The firm’s more than 2,000 employees serve a diverse range of clients from offices around the world. For more information, visit www.duffandphelps.com.
M&A advisory and capital raising services in the United States are provided by Duff & Phelps Securities, LLC. Member FINRA/SIPC. Pagemill Partners is a Division of Duff & Phelps Securities, LLC. M&A advisory and capital raising services in the United Kingdom and Germany are provided by Duff & Phelps Securities Ltd., which is authorized and regulated by the Financial Conduct Authority.
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Harry Laverty
Kinetic Partners, a Division of Duff & Phelps
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