SEC CORNER

SEC FISCAL YEAR 2021 RESULTS AND EXPECTATIONS FOR 2022

The U.S. Securities and Exchange Commission’s (“SEC”) Division of Enforcement recently announced its enforcement results for fiscal year 2021, the period spanning October 1, 2020 to September 30, 2021. 2021 yielded a rise in the number enforcement actions filed, a drop in relief obtained by the SEC, and a record-breaking year for whistleblowers.

The SEC brought 434 stand-alone enforcement actions in 2021, a 7% increase from fiscal year 2020. Despite that increase, the SEC obtained a total of only $3.85 billion in relief, a substantial drop from the approximately $4.7 billion ordered in fiscal year 2020. 2021 also saw the SEC’s whistleblower program surpass a milestone $1 billion in total amounts awarded since the program’s inception, with the SEC issuing 108 awards that totaled $564 million in fiscal year 2021.


As the new administration moves into its first full fiscal year and the world continues to face the challenges of the ongoing COVID-19 pandemic, the SEC is expected to show a continued focus on traditional areas of enforcement in 2022, including securities offerings, accounting and auditing actions, and investment adviser and investment company issues. The SEC is also expected to prioritize investigation and enforcement of emerging risks, such as digital assets and special purpose acquisition companies (“SPACs”). Additionally, with continued whistleblower activity and the disgorgement authority granted to the SEC under the National Defense Authorization Act, the total relief ordered is probable to rise in fiscal year 2022. 

 

ELECTRIC CAR COMPANY SETTLES SEC CHARGES OF DEFRAUDING INVESTORS

As discussed in the December 2021 edition of Executive Liability Insights, the founder and former CEO of a publicly traded electric car company created through a special purpose acquisition company (“SPAC”) transaction was charged by the U.S. Securities and Exchange Commission (“SEC”) and now faces criminal charges for using social media to repeatedly mislead investors. 

The company previously disclosed it had set aside $125 million in preparation to settle the SEC’s allegations it violated U.S. securities laws with numerous misleading statements about its products, technical advancements, and commercial prospects. 

The SEC recently approved this settlement. Without admitting or denying the SEC’s findings, the company, which plans to seek reimbursement from the former CEO, agreed to cooperate with ongoing litigation and investigations. The company “is responsible both for [the former CEO’s] allegedly misleading statements and for other alleged deceptions, all of which falsely portrayed the true state of the company’s business and technology,” Director of the SEC’s Division of Enforcement, Gurbir Grewal, said in a statement. “This misconduct — and the harm it inflicted on retail investors — merits the strong remedies today’s settlement provides.” 
 

SEC ENFORCEMENT ACTIONS, SETTLEMENTS AND JUDGMENTS

December 2021 Noteworthy Enforcement Actions Filed

 Director/Officer

 Role

 Company

 Marco "Sully" Perez 

 President 

 Permian Basin Proppants, Inc.

 Andrew Murstein

 President, COO 

 Medallion Financial Corp.

 Usama Malik

 Former CFO

 Immunomedics, Inc.

 Lawrence Meyers 

 CEO, CFO

 Ichabod’s Cranium, Inc.

 Jason Boucher 

 Former CFO

 American Renal Associates Holdings, Inc.

 Jonathan Wilcox

 Former CFO

 American Renal Associates Holdings, Inc.

 Karen Smith 

 Former Controller 

 American Renal Associates Holdings, Inc. 

December 2021 Noteworthy Settlements And Judgments

Amount

Director/Officer

Role

Company

$2,215,764.31 

David H. Hansen

Former President and CEO

Yellowstone Partners, LLC

$350,000.00

Tom SimeoFormer Chairman and CEOViking Energy Group, Inc.

$65,000.00

David H. MillerCEOPeachCap, Inc.

 

Source: U.S. Securities and Exchange Commission