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U.S. SECURITIES AND EXCHANGE COMMISSION
Division of
Enforcement
ANNUAL REPORT
A LOOK BACK AT FISCAL YEAR 2017

Disclaimer
This is a report of the staff of the U.S. Securities and Exchange Commission. 
The Commission has expressed no view regarding the analysis, findings, or 
conclusions contained herein.

Report available on the Web at www.sec.gov/reports
CONTENTS
Message from the Co-Directors .....................................................................................................................................................1
Introduction .....................................................................................................................................................................................................4
Initiatives .............................................................................................................................................................................................................4
The Cyber Unit ..........................................................................................................................................................................4
The Retail Strategy Task Force .....................................................................................................................................5
Discussion and Analysis of Fiscal Year 2017 ........................................................................................................................6
Overall Results ..........................................................................................................................................................................6
Types of Cases ..........................................................................................................................................................................7
Disgorgement and Penalties Ordered ....................................................................................................................7
Individual Accountability .................................................................................................................................................11
Relief Obtained .......................................................................................................................................................................11
Noteworthy Enforcement Actions ............................................................................................................................12
Appendix ..........................................................................................................................................................................................................15



DIVISION OF ENFORCEMENT ANNUAL REPORT   |   1
MESSAGE FROM THE CO-DIRECTORS
Chairman Jay Clayton appointed us as Co-Directors of the  
U.S. Securities and Exchange Commission’s Division of 
Enforcement in June 2017. We approach our roles guided by 
one overarching principle: Vigorous enforcement of the federal 
securities laws is critical to combat wrongdoing, compensate 
harmed investors, and maintain confidence in the integrity and 
fairness of our markets.
We bring to this task our combined experiences in the U.S. 
Attorney’s Office in Manhattan, the Commission’s Enforcement 
Division, and private law firm practice. With that background, 
we asked ourselves at the outset: What goals should we pursue? 
The question almost answers itself: protect investors, deter 
misconduct, and punish wrongdoers. But how to achieve those 
objectives is the real question. While we necessarily police a 
broad landscape and have numerous areas of focus, at a high 
level, our decision making is guided by five core principles.
Principle 1: Focus on the Main Street Investor. 
Chairman Clayton has said that the Commission’s analysis of 
whether it is accomplishing its mission “starts and ends with 
the long-term interests of the Main Street investor.” We agree. 
Retail investors are often not only the most prevalent partici-
pants in our marketplace, but also the most vulnerable and 
least able to weather financial loss. We will continue to address the kinds of misconduct that 
traditionally have affected retail investors: accounting fraud, sales of unsuitable products and 
the pursuit of unsuitable trading strategies, pump and dump frauds, and Ponzi schemes, to 
name just a few. 
We recently announced the formation of a Retail Strategy Task Force to develop effective 
strategies to address harm to retail investors. The task force will work closely with the 
Commission’s examination staff, as well as the Office of Investor Education and Advocacy, 
and use data analytics to identify areas of risk to retail investors.
As we enhance our focus on retail investors, we will continue to vigorously pursue cases 
against financial institutions and intermediaries. We do not face a binary choice between 
protecting Main Street and policing Wall Street. The Commission has recently brought cases 
against Wall Street firms for a wide variety of misconduct, including: failing to ensure that 
retail clients understood the risks of complex financial products; overcharging millions in 
advisory fees; and putting investors in high-fee mutual fund share classes, when identical, 
lower-cost shares were available. Simply stated, our oversight of Wall Street is most effective, 
and protects those who need it most, when viewed through a lens focused on retail investors.
Stephanie Avakian 
CO-DIRECTOR
Steven Peikin 
CO-DIRECTOR

2   |   U.S. SECURITIES AND EXCHANGE COMMISSION
Principle 2: Focus On Individual Accountability. 
The Commission has long pursued misconduct by both institutions and individuals. 
And it will continue to do so. But common sense and experience teach that individual 
accountability more effectively deters wrongdoing. The vigorous pursuit of individual 
wrongdoers must be the key feature of any effective enforcement program. That pursuit 
will send strong messages of both general and specific deterrence and strip wrongdoers of 
their ill-gotten gains. In many instances, we must also seek to protect investors by barring 
serious wrongdoers and recidivists from our markets. 
In the six months since Chairman Clayton took office, pursuing individuals has continued  
to be the rule, not the exception. One or more individuals have been charged in more than 
80 percent of the standalone enforcement actions the Commission has brought. To be 
sure, this focus on individuals consumes more of our limited resources; with more to lose, 
individuals are more likely to litigate with the Commission. But that price is worth paying.
Principle 3: Keep Pace With Technological Change. 
Technology has dramatically transformed our markets. So too has it transformed the ability 
of wrongdoers to engage in cyber-enabled misconduct. Just a few years ago, it was difficult 
to imagine a market manipulation scheme accomplished by hacking into the electronic 
accounts of others and then forcing trades to pump up a stock price. Or the brokering of 
stolen inside information on the so-called “dark web,” paid for in untraceable cryptocur-
rency. Yet these are the sort of schemes we now frequently encounter.
As nefarious actors take advantage of technological change and market evolution, the 
Commission’s enforcement efforts must respond with purpose and vigor. To that end, we 
formed a specialized Cyber Unit to consolidate our substantial cyber-related expertise. The 
Cyber Unit includes experts in cyber intrusions, distributed ledger technology, and the dark 
web. Its members investigate and prosecute these increasing technologically-driven violations 
and coordinate with the Department of Justice and other criminal authorities.
Principle 4: Impose Sanctions That Most Effectively Further Enforcement Goals.
Sanctions are critical to driving behavior, and we have a wide array of tools available to 
further our objectives. Our remedies include: obtaining monetary relief in the form of 
disgorgement, penalties, and asset freezes; barring wrongdoers from working in the securi-
ties industry; and, when appropriate, obtaining more tailored relief, such as specific under-
takings, admissions of wrongdoing, and monitoring or other compliance requirements. We 
do not believe in a formulaic or statistics-oriented approach. Instead, in every case we will 
consider the package of remedies that will be most appropriate in the matter at hand and 
more broadly.
Principle 5: Constantly Assess The Allocation Of Our Resources. 
The volume of potential securities violations reflects the multi-trillion-dollar size of our 
markets. Last year alone, Commission personnel reviewed more than 16,000 tips, largely 
from the general public, and more than 20,000 reports of suspicious activity filed by broker-
dealers and other entities.

DIVISION OF ENFORCEMENT ANNUAL REPORT   |   3
The Enforcement Division is the Commission’s largest division, but employs fewer than 
1,200 professionals. As a result, we must constantly assess whether we are allocating our 
resources to address the most significant market risks and in the most effective manner, 
keeping front of mind the violators who pose the most serious threats to investors and 
market integrity.
Evaluating Our Efforts. 
Judging the effectiveness of our resource allocation is a complex task. Traditionally,  
many have judged the Commission on quantitative metrics. Measured by those standards, 
Fiscal Year (FY) 2017 was successful. The Commission brought 754 actions and obtained 
judgments and orders totaling more than $3.7 billion in disgorgement and penalties. Signifi-
cantly, it also returned a record $1.07 billion to harmed investors, suspended trading in the 
securities of 309 companies, and barred or suspended more than 625 individuals.
While such statistics provide some kind of measurement, they provide a limited picture of 
the quality, nature, and effectiveness of our efforts. For example, returning $100,000 to 
several dozen defrauded investors has little impact on our overall statistics, but can be life-
changing for those investors. And, of course, violations that are prevented or deterred are 
never reflected in statistics. We also note that some cases take many years from initiation to 
resolution. Note that in 2017, $1.07 billion was distributed to harmed investors while  
$140 million was distributed in 2016, but much of the effort that resulted in the 2017 
numbers occurred in prior years. 
As a result, we believe the Commission’s enforcement program should be judged both 
quantitatively and qualitatively and over various time periods. Have we focused on the most 
serious violations? Have we obtained meaningful punishments that deter unlawful conduct? 
Have we incapacitated wrongdoers? Are we recouping ill-gotten gains and returning money 
to investors? We believe the course we have set, and the principles we are following, answer 
all those questions in the affirmative.
This report is part of our effort to measure our effectiveness and our progress toward 
achieving these five objectives. In this report, we discuss the Enforcement Division’s activity 
over the past fiscal year—activity that we believe should be assessed not just quantitatively, 
but also qualitatively.
Sincerely,
Stephanie Avakian and Steven Peikin 
Co-Directors, Division of Enforcement
U.S. Securities and Exchange Commission
November 15, 2017

4   |   U.S. SECURITIES AND EXCHANGE COMMISSION
INTRODUCTION
The ongoing efforts made by the Division of Enforcement (Enforcement) to deter miscon-
duct and punish securities law violators are critical to safeguarding millions of investors 
and instilling confidence in the integrity of the U.S. markets. Each year, Enforcement 
brings hundreds of civil enforcement actions against individuals and entities for fraud 
and other misconduct. The substantial remedies we obtain are important. They protect 
investors by deterring future wrongdoing, and when we obtain disgorgement of ill-gotten 
gains, harmed investors are often compensated. We also seek bars that prevent wrongdo-
ers from working in the securities industry, as we believe holding individuals accountable 
for their improper actions is important and effective. It is a privilege to work in the securi-
ties industry and it is no place for bad actors.
INITIATIVES
Enforcement has a broad mandate with responsibility for covering broad ground 
across the securities markets. But, at the most basic level, the Division’s area of greatest 
focus—protection of retail investors—has not changed over time. Today, this perspective 
is driving our resources to: risks posed by cyber-related misconduct; issues raised by the 
activities of investment advisers, broker-dealers, and other registrants; financial reporting 
and disclosure issues involving public companies; and insider trading and market abuse. 
These issues will be priorities for the Division, and we will continue to pursue cases and 
advance efforts to protect retail investors and market integrity. 
In an effort to more closely align our allocation of resources with two of our key priori-
ties—specifically, protecting retail investors and combatting cyber-related threats—at 
the end of FY 2017, the Division announced the creation of a Cyber Unit and a Retail 
Strategy Task Force.
The Cyber Unit
To combat cyber-related threats, which are among the greatest risks facing our securities 
markets, the Division formed a Cyber Unit. The Cyber Unit combines Enforcement's 
substantial, existing cyber-related expertise and its proficiency in digital ledger technology. 
The Unit initially will focus its efforts on the following key areas:
• 
Market manipulation schemes involving false information spread through electronic 
and social media;
• 
Hacking to obtain material nonpublic information and trading on that information;
• 
Violations involving distributed ledger technology and initial coin offerings (ICOs);
• 
Misconduct perpetrated using the dark web;
• 
Intrusions into retail brokerage accounts; and
• 
Cyber-related threats to trading platforms and other critical market infrastructure.

DIVISION OF ENFORCEMENT ANNUAL REPORT   |   5
 
 
Although Enforcement has been focused on many of these issues for some time, the Cyber 
Unit formalizes the Division’s efforts to develop and apply the Commission’s considerable 
expertise in this rapidly-developing area.
While the end result of the Division’s work is often a recommendation that the Commis-
sion take enforcement action, we also pursue alternatives where appropriate. The 
Division’s recent activity in cyber-related actions provides two examples. First, in recogni-
tion of the growing use of distributed ledger technology and ICOs, in July 2017, the 
Commission released a Report of Investigation that concluded that the federal securities 
laws may apply to certain initial coin offerings or other distributed ledger or blockchain-
enabled means for raising capital, depending on the facts and circumstance.
1
 Second, in 
early November 2017, Enforcement and the Commission’s Office of Compliance Inspec-
tions and Examinations (OCIE) issued a public statement concerning endorsements of 
stocks and other investments by celebrities and others on social media networks.
2
 
The Retail Strategy Task Force
Effective enforcement of the federal securities laws is critical to safeguarding the long-term 
interests of retail investors. To focus the Division on the type of misconduct that often 
targets retail investors, the Division formed the Retail Strategy Task Force. The Task 
Force will be dedicated to developing effective strategies and methods to identify potential 
harm to retail investors. The Task Force builds on the Division’s past efforts to protect 
retail investors and will draw from the Division’s deep experience in the area. It is focused, 
in particular, on harnessing the Commission’s ability to use technology and data analyt-
ics to identify large-scale wrongdoing. The Task Force also works closely with OCIE to 
identify areas of risk to retail investors, and with the Commission’s Office of Investor 
Education and Advocacy to educate retail investors about those risks.
The Task Force will focus on wrongdoing implicating the microcap market, as well as 
Ponzi schemes and offering frauds, where victims typically are retail investors. But the 
Task Force also will focus on identifying misconduct in other areas, such as that which 
occurs at the intersection of investment professionals and retail investors, which can 
present significant opportunity for misconduct. Some examples of this type of miscon-
duct include steering clients to higher-cost mutual fund share classes, abuses in wrap-
fee accounts, investment adviser recommendations to buy and hold highly volatile 
products like inverse exchange-traded funds, suitability issues involving the sale of 
structured products to retail investors, and abusive sales practices such as churning and 
excessive trading.
1 www.sec.gov/litigation/investreport/34-81207.pdf.
2 www.sec.gov/news/public-statement/statement-potentially-unlawful-promotion-icos.

6   |   U.S. SECURITIES AND EXCHANGE COMMISSION
DISCUSSION AND ANALYSIS OF  
FISCAL YEAR 2017
Overall Results
Even in the midst of transition in leadership, FY 2017 was a successful and impactful year 
for the Enforcement Division. The Commission brought a diverse mix of 754 enforce-
ment actions, of which:
• 
446 were “standalone” actions brought in federal court or as administrative proceedings;
• 
196 were “follow-on” proceedings seeking bars based on the outcome of Commission 
actions or actions by criminal authorities or other regulators; and
• 
112 were proceedings to deregister public companies—typically microcap—that were 
delinquent in their Commission filings.
Detailed results from FY 2017 are set forth below. FY 2016 results are also reflected 
below for comparison. 
The number of standalone enforcement actions decreased in FY 2017 when compared 
to FY 2016. The bulk of that difference is attributable to 84 actions brought in FY 2016 
(roughly 15 percent of standalone actions that year) as part of the Commission’s Munici-
palities Continuing Disclosure Cooperation (MCDC) Initiative, a voluntary self-reporting 
program that targeted material misstatements and omissions in municipal bond offering 
documents. The MCDC Initiative concluded in FY 2016.
Enforcement Actions Filed in  
Fiscal Year 2017 and 2016  
(Including MCDC)
FY 2017FY 2016
Standalone Enforcement Actions446548
Follow-on Admin. Proceedings196195
Delinquent Filings112125
Total Actions754868
Enforcement Actions Filed in 
 Fiscal Year 2017 and 2016  
(Excluding MCDC)
FY 2017FY 2016
Standalone Enforcement Actions446464
Follow-on Admin. Proceedings196195
Delinquent Filings112125
Total Actions754784

DIVISION OF ENFORCEMENT ANNUAL REPORT   |   7
Types of Cases
As the chart below illustrates, consistent with FY 2016, a significant number of the 
Commission’s 446 standalone cases in FY 2017 concerned investment advisory issues, 
securities offerings, and issuer reporting/accounting and auditing, each comprising 
approximately 20 percent of the overall number of standalone actions. The Commission 
also continued to bring actions relating to market manipulation, insider trading, and 
broker-dealers, with each comprising approximately 10 percent of the overall number of 
standalone actions, as well as other areas.
0
20406080100
Actions Filed
2016
2017
Issuer Reporting / 
Audit & Accounting
Securities Offering
Inv. Adviser / Inv. Company
Broker Dealer
Insider Trading
Market Manipulation
Public Finance Abuse
FCPA
Miscellaneous
Transfer Agent
NRSRO
A breakdown of the number and percentage of the types of actions brought in FY 2016 
and 2017 is in the attached appendix.
Disgorgement and Penalties Ordered
In FY 2017, the Commission continued to obtain significant monetary judgments against 
parties in enforcement actions. All told, parties in the Commission’s actions and proceed-
ings were ordered to pay a total of $2.9 
billion in disgorgement of ill-gotten gains, 
an increase over the prior year. Penalties 
imposed totaled $832 million, a decrease 
from the prior year. Total monetary relief 
ordered in FY 2017 declined approxi-
mately seven percent from the prior year.
Total Money Ordered (in millions)
FY 2017FY 2016
Penalties$832$1,273
Disgorgement$2,957$2,809
Total$3,789$4,083

8   |   U.S. SECURITIES AND EXCHANGE COMMISSION
As the below tables demonstrate, the five percent of cases that involve the largest penalties 
and disgorgement account for the vast majority of all financial remedies the Commission 
obtains. Yet the remaining 95 percent of cases not only constitute the bulk of the Enforce-
ment Division’s overall activity, but also address the broadest array of conduct. This is one 
illustration of how statistical assessments present an incomplete picture.
Penalties Ordered (in Millions)
20172016
TotalPctTotalPct
Top 5% Largest Cases$51462%  $95475%
Remaining 95% Cases$31838%  $32025%
Total$832100%$1,274100%
Disgorgement Ordered (in Millions)
20172016
TotalPctTotalPct
Top 5% Largest Cases$2,04669%$1,84866%
Remaining 95% Cases   $91131%  $96134%
Total$2,957100%$2,809100%

DIVISION OF ENFORCEMENT ANNUAL REPORT   |   9
Experience has shown that in most years, a significant percentage of the disgorgement 
and penalty totals are attributed to a small number of cases. As illustrated below, this was 
the case in FY 2016 and 2017.
Disgorgement Orders Over $100 Million in Fiscal Year 2017
PartyAmount
Telia Company AB$457 million 
Braskem S.A.$325 million 
Teva Pharm. Industries Ltd. $236 million 
Steve Chen, et al.$145 million 
JPMorgan Chase & Co.$131 million 
Total Disgorgement Orders Over $100 M$1.294 billion
Percentage of Total Disgorgement Ordered in FY 201744%
Disgorgement Orders Over $100 Million in Fiscal Year 2016
PartyAmount
JPMorgan Chase Bank, N.A., et al.$139 million 
Trevor G. Cook, et al.$264 million 
Louis V. Schooler$148 million 
VimpelCom Ltd.$375 million 
The Bank of New York Mellon$133 million 
Och-Ziff Capital Mgmt Group LLC, et al.$201 million 
Total Disgorgement Orders Over $100 M$1.260 billion
Percentage of Total Disgorgement Ordered in FY 201645%

10   |   U.S. SECURITIES AND EXCHANGE COMMISSION
Penalty Orders Over $50 Million in Fiscal Year 2017
PartyAmount
Credit Suisse AG$90 million 
State Street Bank & Trust Co.$75 million 
Ming Xu $57 million 
Total Penalty Orders Over $50 Million$222 million
Percentage of Total Penalties Ordered in FY 201727%
Penalty Orders Over $50 Million in Fiscal Year 2016
PartyAmount
Merrill Lynch$358 million 
Weatherford Int’l$140 million
JPMorgan Chase Bank, N.A., et al.$128 million 
Monsanto Company$ 80 million
Total Penalty Orders Over $50 Million$706 million
Percentage of Total Penalties Ordered in FY 201655%
More information about the actions that led to these disgorgement and penalty orders is 
available in the appendix.

DIVISION OF ENFORCEMENT ANNUAL REPORT   |   11
Finally, a substantial amount of money was returned to harmed investors in FY 2017. 
In the past two years combined, the Commission distributed $1.21 billion to victims of 
wrongdoing. The majority of funds were distributed in FY 2017, when the Commission 
returned a record $1.07 billion to harmed investors.
Money Distributed to 
Harmed Investors  
(in millions)
FY 2017 FY 2016 
$1,073 $140 
A significant portion of the total funds distributed in FY 2017 
($814 million) came from four Fair Funds—a $494 million 
disbursement from the CR Intrinsic Investors fund,
3
 a $200 
million disbursement from a JPMorgan Chase fund,
4
 and a 
$120 million disbursement from two related Credit Suisse 
RMBS funds.
5
 The balance of the funds distributed in  
FY 2017 ($259 million) came from 48 other distribution funds comprised of 28 Fair 
Funds ($242 million) and 20 Disgorgement Funds ($17 million).
Individual Accountability
Individual accountability is critical to an effective enforcement program. In FY 2017,  
73 percent of the Commission’s standalone actions involved charges against one or more 
individuals, the same percentage as in FY 2016 (excluding the 84 actions attributable to 
the MCDC Initiative).
6
 
Relief Obtained
In every enforcement action, the Division seeks appropriately tailored sanctions that 
further enforcement goals. In addition to disgorgement and penalties, there are a wide 
array of potential remedies available. In each case, the Division seeks those remedies that 
will be the most meaningful. Some of these remedies are discussed in more detail below.
Trading Suspensions
Under the federal securities laws, the Commission can suspend trading in a stock for  
10 days and generally prohibit a broker-dealer from soliciting investors to buy or sell the 
stock again until certain reporting requirements are met. Trading suspensions are a signifi-
cant enforcement tool and greatly enhance our ability to protect investors from possible 
fraud. In FY 2017, the Commission suspended trading in the securities of 309 issuers, a 
55 percent increase over FY 2016, in order to combat potential market manipulation and 
microcap fraud threats to investors.
3  
SEC v. CR Intrinsic Investors, LLC, et al., No. 12-cv-8466 (S.D.N.Y.).
4  
JPMorgan Chase & Co., Administrative Proceeding File No. 3-15507.
5  Credit Suisse Securities USA, LLC, et al., Administrative Proceeding File No. 3-15098
6  When MCDC-related actions are included in FY 2016’s count, 61 percent of the Commission’s standalone actions
involved charges against one or more individuals.

12   |   U.S. SECURITIES AND EXCHANGE COMMISSION
Court-Ordered Asset Freezes
Court-ordered prejudgment relief in the form of asset freezes is important to the Commis-
sion’s ability to protect investors. These freezes prevent alleged wrongdoers from dissipat-
ing assets that could be distributed to harmed investors. Wrongdoers often are adept at 
hiding and moving assets offshore, and the Commission’s ability to obtain meaningful 
financial remedies, and to return money to harmed investors, therefore may depend on 
the ability to obtain an asset freeze at an early stage. These circumstances require seeking 
federal court action on an emergency basis. In FY 2017, the Commission sought 35 
court-ordered asset freezes, a slight increase from FY 2016, when the Commission sought 
33 asset freezes.
Bars and Suspensions Imposed
Bars and suspensions also are invaluable tools. One of the most important things that 
the Commission can do proactively to protect investors and the market is to remove bad 
actors from positions where they can engage in future wrongdoing. Bars and suspensions 
are the means by which the Commission prevents wrongdoers from serving as officers or 
directors of public companies, dealing in penny stocks, associating with registered entities 
such as broker-dealers and investment advisers, or appearing or practicing before the 
Commission as accountants or attorneys.
Enforcement actions resulted in over 625 bars and suspensions of wrongdoers in FY 2017 
and over 650 bars and suspensions in FY 2016.
Noteworthy Enforcement Actions
While the Division’s efforts resulted in many noteworthy enforcement actions in FY 2017, 
the matters described below give a sense of some of the actions the Commission brought 
in areas of the Division’s greatest focus, as well as actions in other areas to demonstrate 
the breadth of the landscape the Division covers.
In FY 2017, the Commission brought charges against:
Direct Impact on Retail Investors and Conduct of Registrants
• 
Thirteen individuals allegedly involved in two Long Island-based cold calling scams that 
bilked more than 100 victims out of more than $10 million through high-pressure sales 
tactics and lies about penny stocks.
7
 
• 
Twenty-seven individuals and entities behind various alleged stock promotion schemes 
that left investors with the impression they were reading independent, unbiased analyses 
on investing websites while writers actually were being secretly compensated for touting 
company stock.
8
 
• 
Barclays Capital for charging improper advisory fees and mutual fund sales charges to 
clients, who were overcharged by nearly $50 million. The firm agreed to pay more than 
$97 million in disgorgement and penalties to settle the Commission’s claims.
9
 
7 www.sec.gov/news/press-release/2017-124.
8 www.sec.gov/news/press-release/2017-79.
9 www.sec.gov/news/press-release/2017-98.

DIVISION OF ENFORCEMENT ANNUAL REPORT   |   13
• 
Morgan Stanley Smith Barney related to single inverse ETF investments it recom-
mended to advisory clients. The firm agreed to pay an $8 million penalty and admit 
wrongdoing to settle these charges.
10
 
• 
The investment services subsidiary of SunTrust Banks for collecting more than  
$1.1 million in avoidable fees from clients by improperly recommending more expen-
sive share classes of various mutual funds when cheaper shares of the same funds 
were available. The firm agreed to pay a $1.1 million penalty to settle the charges, and 
separately began refunding the overcharged fees plus interest to affected clients after the 
Division’s investigation began.
11
 
• 
Investment management firm Pacific Investment Management Company for misleading 
investors about the performance of one its first actively managed exchange-traded funds 
and failing to accurately value certain fund securities. The firm agreed to retain an 
independent compliance consultant and pay nearly $20 million to settle the charges.
12
 
• 
BNY Mellon for miscalculating its risk-based capital ratios and risk-weighted assets 
reported to investors. The firm agreed to pay a $6.6 million penalty.
13
 
• 
Three New York-based brokers for allegedly making unsuitable recommendations that 
resulted in substantial losses to customers and hefty commissions for the brokers. One 
of the brokers agreed to pay more than $400,000 to settle the charges.
14
 
• 
Two New York-based brokers with allegedly fraudulently using an in-and-out trading 
strategy that was unsuitable for customers in order to generate substantial commissions 
for themselves.
15
 
Cyber-Related Misconduct
• 
Three Chinese traders for allegedly trading on hacked, nonpublic, market-moving 
information stolen from two prominent law firms, making almost $3 million in  
illegal profits.
16
 
• 
A Virginia-based mechanical engineer for allegedly scheming to manipulate the price  
of Fitbit stock by making a phony regulatory filing.
17
 
 
Insider Trading
• 
A partner at a Hong Kong-based private equity firm who allegedly amassed more than 
$29 million in illegal profits by insider trading in advance of the April 2016 acquisition 
of DreamWorks Animation SKG Inc. by Comcast Corp.
18
 
• 
A former government employee turned political intelligence consultant and three others 
for engaging in an alleged insider trading scheme involving tips of nonpublic informa-
tion about government plans to cut Medicare reimbursement rates, which affected the 
stock prices of certain publicly traded medical providers or suppliers.
19
 
10 www.sec.gov/news/pressrelease/2017-46.html.
11 www.sec.gov/news/press-release/2017-165.
12 www.sec.gov/news/pressrelease/2016-252.html.
13 www.sec.gov/news/pressrelease/2017-9.html.
14 www.sec.gov/news/press-release/2017-180.
15 www.sec.gov/news/pressrelease/2017-2.html.
16 www.sec.gov/news/pressrelease/2016-280.html.
17 www.sec.gov/news/press-release/2017-107.
18 www.sec.gov/news/pressrelease/2017-44.html.
19 www.sec.gov/news/press-release/2017-109.

14   |   U.S. SECURITIES AND EXCHANGE COMMISSION
Issuer Reporting and Disclosure Issues and Auditor Misconduct
• 
Ernst & Young LLP, which agreed to pay more than $11.8 million to settle claims 
related to failed audits of an oil services company that used deceptive income tax 
accounting to inflate earnings, as well as two of the firm’s partners, who agreed to 
suspensions from practicing before the Commission.
20
 
• 
KPMG LLP and an audit partner for failing to properly audit the financial statements 
of an oil and gas company, resulting in investors being misinformed about the energy 
company’s value. The firm agreed to pay more than $6.2 million to settle the charges, 
and the audit partner agreed to a suspension from appearing and practicing before the 
Commission.
21
 
• 
Canadian-based oil and gas company Penn West Petroleum Ltd. and three of its former 
top finance executives for their roles in an extensive, multi-year accounting fraud.
22
 
Other Noteworthy Actions
• 
Petrochemical manufacturer Braskem S.A. for creating false books and records to 
conceal millions of dollars in illicit bribes paid to Brazilian government officials to win 
or retain business. The entity settled by paying $957 million to the Commission, the 
U.S. Department of Justice (DOJ), and authorities in Brazil and Switzerland.
23
 
• 
Sweden-based telecommunications provider Telia Company AB related to violations 
of the Foreign Corrupt Practices Act (FCPA) to win business in Uzbekistan, which the 
entity settled by paying $956 million to the Commission, DOJ, and Dutch and Swedish 
law enforcement.
24
 
• 
A former official of the nation’s third-largest public pension fund and two brokers 
accused of orchestrating a pay-to-play scheme to steer billions of dollars to certain firms 
in exchange for luxury gifts, lavish vacations, and tens of thousands of dollars spent on 
illegal narcotics and prostitutes.
25
 
• 
Citadel Securities LLC, which agreed to pay $22.6 million to settle claims that its 
business unit handling retail customer orders from other brokerage firms made mislead-
ing statements to them about the way it priced trades.
26
  
• 
A businessman and two companies for defrauding investors in a pair of so-called ICOs 
purportedly backed by investments in real estate and diamonds.
27
 
• 
A Ukraine-based trading firm, Avalon FA Ltd., accused of manipulating the U.S. 
markets hundreds of thousands of times and the New York-based brokerage firm of 
Lek Securities and its CEO who allegedly helped make it possible.
28
20 www.sec.gov/news/pressrelease/2016-219.html.
21 www.sec.gov/news/press-release/2017-142.
22 www.sec.gov/news/press-release/2017-120. 
23 www.sec.gov/news/pressrelease/2016-271.html.
24 www.sec.gov/news/press-release/2017-171.
25 www.sec.gov/news/pressrelease/2016-272.html.
26 www.sec.gov/news/pressrelease/2017-11.html.
27 www.sec.gov/news/press-release/2017-185-0.
28 www.sec.gov/news/pressrelease/2017-63.html.

DIVISION OF ENFORCEMENT ANNUAL REPORT   |   15
Breakdown of Classification of Standalone Enforcement Actions
20172016
ActionsPctActionsPct
Issuer Reporting / Audit & Accounting9521%9317%
Securities Offering9421%9016%
Inv. Adviser / Inv. Company8218%9818%
Broker Dealer5312%6111%
Market Manipulation
419%305%
Insider Trading
419%458%
Public Finance Abuse
174%9718%
FCPA
133%214%
Miscellaneous
72%92%
Transfer Agent
31%20%
NRSRO
00%20%
Total446100%548100%
Disgorgement Orders over $100 Million Entered in Fiscal Year 2017
PartyLink to Release
Steve Chen, et al.www.sec.gov/news/pressrelease/2015-227.html 
JPMorgan Chase & Co.www.sec.gov/news/pressrelease/2016-241.html 
Braskem S.A.www.sec.gov/news/pressrelease/2016-271.html 
Teva Pharmaceutical Industries Ltd.www.sec.gov/news/pressrelease/2016-277.html 
Telia Company ABwww.sec.gov/news/press-release/2017-171 
Penalty Orders over $50 Million Entered in Fiscal Year 2017
PartyLink to Release
Ming Xuwww.sec.gov/news/press-release/2014-60 
Credit Suisse AGwww.sec.gov/news/pressrelease/2016-210.html 
State Street Bank & Trust Co.www.sec.gov/litigation/admin/2016/ic-32390-s.pdf 
APPENDIX

16   |   U.S. SECURITIES AND EXCHANGE COMMISSION
Disgorgement Orders over $100 Million Entered in Fiscal Year 2016
PartyLink to Release
Trevor G. Cook, et al.www.sec.gov/litigation/litreleases/2009/lr21313.htm
Louis V. Schoolerwww.sec.gov/news/press-release/2012-2012-183htm 
JPMorgan Chase Bank, N.A., et al.www.sec.gov/news/pressrelease/2015-283.html 
The Bank of New York Mellonwww.sec.gov/litigation/admin/2016/ic-32151-s.pdf
VimpelCom Ltd.www.sec.gov/news/pressrelease/2016-34.html
Och-Ziff Capital Management Group 
LLC, et al.
www.sec.gov/news/pressrelease/2016-203.html
Penalty Orders over $50 Million Entered in Fiscal Year 2016
PartyLink to Release
Merrill Lynch, Pierce, Fenner & Smith 
Inc., et al.
www.sec.gov/news/pressrelease/2016-128.html 
Weatherford International PLC, et al.www.sec.gov/news/pressrelease/2016-194.html 
JPMorgan Chase Bank, N.A., et al.www.sec.gov/news/pressrelease/2015-283.html 
Monsanto Companywww.sec.gov/news/pressrelease/2016-25.html 
VimpelCom Ltd.www.sec.gov/news/pressrelease/2016-34.html 
Och-Ziff Capital Management Group 
LLC, et al.
www.sec.gov/news/pressrelease/2016-203.html 

U.S. Securities and 
Exchange Commission
100 F Street NE
Washington, DC 20549
www.sec.gov

U . S .  S E C U R I T I E S  A N D  E X C H A N G E  C O M M I S S I O N

Division of
Enforcement

ANNUAL REPORT
A LOOK BACK AT FISCAL YEAR 2017



Disclaimer
This is a report of the staff of the U.S. Securities and Exchange Commission. 
The Commission has expressed no view regarding the analysis, findings, or 
conclusions contained herein.



Report available on the Web at www.sec.gov/reports

CONTENTS

Message from the Co-Directors......................................................................................................................................................1

Introduction...................................................................................................................................................................................................... 4

Initiatives.............................................................................................................................................................................................................. 4

The Cyber Unit...........................................................................................................................................................................4

The Retail Strategy Task Force......................................................................................................................................5

Discussion and Analysis of Fiscal Year 2017.........................................................................................................................6

Overall Results...........................................................................................................................................................................6

Types of Cases........................................................................................................................................................................... 7

Disgorgement and Penalties Ordered..................................................................................................................... 7

Individual Accountability.................................................................................................................................................. 11

Relief Obtained........................................................................................................................................................................ 11

Noteworthy Enforcement Actions.............................................................................................................................12

Appendix...........................................................................................................................................................................................................15

http://www.sec.gov/reports




DIVISION OF ENFORCEMENT ANNUAL REPORT   |   1

MESSAGE FROM THE CO-DIRECTORS
Chairman Jay Clayton appointed us as Co-Directors of the  
U.S. Securities and Exchange Commission’s Division of 
Enforcement in June 2017. We approach our roles guided by 
one overarching principle: Vigorous enforcement of the federal 
securities laws is critical to combat wrongdoing, compensate 
harmed investors, and maintain confidence in the integrity and 
fairness of our markets.

We bring to this task our combined experiences in the U.S. 
Attorney’s Office in Manhattan, the Commission’s Enforcement 
Division, and private law firm practice. With that background, 
we asked ourselves at the outset: What goals should we pursue? 
The question almost answers itself: protect investors, deter 
misconduct, and punish wrongdoers. But how to achieve those 
objectives is the real question. While we necessarily police a 
broad landscape and have numerous areas of focus, at a high 
level, our decision making is guided by five core principles.

Principle 1: Focus on the Main Street Investor. 
Chairman Clayton has said that the Commission’s analysis of 
whether it is accomplishing its mission “starts and ends with 
the long-term interests of the Main Street investor.” We agree. 
Retail investors are often not only the most prevalent partici-
pants in our marketplace, but also the most vulnerable and 

least able to weather financial loss. We will continue to address the kinds of misconduct that 
traditionally have affected retail investors: accounting fraud, sales of unsuitable products and 
the pursuit of unsuitable trading strategies, pump and dump frauds, and Ponzi schemes, to 
name just a few. 

We recently announced the formation of a Retail Strategy Task Force to develop effective 
strategies to address harm to retail investors. The task force will work closely with the 
Commission’s examination staff, as well as the Office of Investor Education and Advocacy, 
and use data analytics to identify areas of risk to retail investors.

As we enhance our focus on retail investors, we will continue to vigorously pursue cases 
against financial institutions and intermediaries. We do not face a binary choice between 
protecting Main Street and policing Wall Street. The Commission has recently brought cases 
against Wall Street firms for a wide variety of misconduct, including: failing to ensure that 
retail clients understood the risks of complex financial products; overcharging millions in 
advisory fees; and putting investors in high-fee mutual fund share classes, when identical, 
lower-cost shares were available. Simply stated, our oversight of Wall Street is most effective, 
and protects those who need it most, when viewed through a lens focused on retail investors.

Stephanie Avakian 
CO-DIRECTOR

Steven Peikin 
CO-DIRECTOR



2   |   U.S. SECURITIES AND EXCHANGE COMMISSION

Principle 2: Focus On Individual Accountability. 
The Commission has long pursued misconduct by both institutions and individuals. 
And it will continue to do so. But common sense and experience teach that individual 
accountability more effectively deters wrongdoing. The vigorous pursuit of individual 
wrongdoers must be the key feature of any effective enforcement program. That pursuit 
will send strong messages of both general and specific deterrence and strip wrongdoers of 
their ill-gotten gains. In many instances, we must also seek to protect investors by barring 
serious wrongdoers and recidivists from our markets. 

In the six months since Chairman Clayton took office, pursuing individuals has continued  
to be the rule, not the exception. One or more individuals have been charged in more than 
80 percent of the standalone enforcement actions the Commission has brought. To be 
sure, this focus on individuals consumes more of our limited resources; with more to lose, 
individuals are more likely to litigate with the Commission. But that price is worth paying.

Principle 3: Keep Pace With Technological Change. 
Technology has dramatically transformed our markets. So too has it transformed the ability 
of wrongdoers to engage in cyber-enabled misconduct. Just a few years ago, it was difficult 
to imagine a market manipulation scheme accomplished by hacking into the electronic 
accounts of others and then forcing trades to pump up a stock price. Or the brokering of 
stolen inside information on the so-called “dark web,” paid for in untraceable cryptocur-
rency. Yet these are the sort of schemes we now frequently encounter.

As nefarious actors take advantage of technological change and market evolution, the 
Commission’s enforcement efforts must respond with purpose and vigor. To that end, we 
formed a specialized Cyber Unit to consolidate our substantial cyber-related expertise. The 
Cyber Unit includes experts in cyber intrusions, distributed ledger technology, and the dark 
web. Its members investigate and prosecute these increasing technologically-driven violations 
and coordinate with the Department of Justice and other criminal authorities.

Principle 4: Impose Sanctions That Most Effectively Further Enforcement Goals.
Sanctions are critical to driving behavior, and we have a wide array of tools available to 
further our objectives. Our remedies include: obtaining monetary relief in the form of 
disgorgement, penalties, and asset freezes; barring wrongdoers from working in the securi-
ties industry; and, when appropriate, obtaining more tailored relief, such as specific under-
takings, admissions of wrongdoing, and monitoring or other compliance requirements. We 
do not believe in a formulaic or statistics-oriented approach. Instead, in every case we will 
consider the package of remedies that will be most appropriate in the matter at hand and 
more broadly.

Principle 5: Constantly Assess The Allocation Of Our Resources. 
The volume of potential securities violations reflects the multi-trillion-dollar size of our 
markets. Last year alone, Commission personnel reviewed more than 16,000 tips, largely 
from the general public, and more than 20,000 reports of suspicious activity filed by broker-
dealers and other entities.



DIVISION OF ENFORCEMENT ANNUAL REPORT   |   3

The Enforcement Division is the Commission’s largest division, but employs fewer than 
1,200 professionals. As a result, we must constantly assess whether we are allocating our 
resources to address the most significant market risks and in the most effective manner, 
keeping front of mind the violators who pose the most serious threats to investors and 
market integrity.

Evaluating Our Efforts. 
Judging the effectiveness of our resource allocation is a complex task. Traditionally,  
many have judged the Commission on quantitative metrics. Measured by those standards, 
Fiscal Year (FY) 2017 was successful. The Commission brought 754 actions and obtained 
judgments and orders totaling more than $3.7 billion in disgorgement and penalties. Signifi-
cantly, it also returned a record $1.07 billion to harmed investors, suspended trading in the 
securities of 309 companies, and barred or suspended more than 625 individuals.

While such statistics provide some kind of measurement, they provide a limited picture of 
the quality, nature, and effectiveness of our efforts. For example, returning $100,000 to 
several dozen defrauded investors has little impact on our overall statistics, but can be life-
changing for those investors. And, of course, violations that are prevented or deterred are 
never reflected in statistics. We also note that some cases take many years from initiation to 
resolution. Note that in 2017, $1.07 billion was distributed to harmed investors while  
$140 million was distributed in 2016, but much of the effort that resulted in the 2017 
numbers occurred in prior years. 

As a result, we believe the Commission’s enforcement program should be judged both 
quantitatively and qualitatively and over various time periods. Have we focused on the most 
serious violations? Have we obtained meaningful punishments that deter unlawful conduct? 
Have we incapacitated wrongdoers? Are we recouping ill-gotten gains and returning money 
to investors? We believe the course we have set, and the principles we are following, answer 
all those questions in the affirmative.

This report is part of our effort to measure our effectiveness and our progress toward 
achieving these five objectives. In this report, we discuss the Enforcement Division’s activity 
over the past fiscal year—activity that we believe should be assessed not just quantitatively, 
but also qualitatively.

Sincerely,

Stephanie Avakian and Steven Peikin 
Co-Directors, Division of Enforcement
U.S. Securities and Exchange Commission
November 15, 2017



4   |   U.S. SECURITIES AND EXCHANGE COMMISSION

INTRODUCTION
The ongoing efforts made by the Division of Enforcement (Enforcement) to deter miscon-
duct and punish securities law violators are critical to safeguarding millions of investors 
and instilling confidence in the integrity of the U.S. markets. Each year, Enforcement 
brings hundreds of civil enforcement actions against individuals and entities for fraud 
and other misconduct. The substantial remedies we obtain are important. They protect 
investors by deterring future wrongdoing, and when we obtain disgorgement of ill-gotten 
gains, harmed investors are often compensated. We also seek bars that prevent wrongdo-
ers from working in the securities industry, as we believe holding individuals accountable 
for their improper actions is important and effective. It is a privilege to work in the securi-
ties industry and it is no place for bad actors.

INITIATIVES
Enforcement has a broad mandate with responsibility for covering broad ground 
across the securities markets. But, at the most basic level, the Division’s area of greatest 
focus—protection of retail investors—has not changed over time. Today, this perspective 
is driving our resources to: risks posed by cyber-related misconduct; issues raised by the 
activities of investment advisers, broker-dealers, and other registrants; financial reporting 
and disclosure issues involving public companies; and insider trading and market abuse. 
These issues will be priorities for the Division, and we will continue to pursue cases and 
advance efforts to protect retail investors and market integrity. 

In an effort to more closely align our allocation of resources with two of our key priori-
ties—specifically, protecting retail investors and combatting cyber-related threats—at 
the end of FY 2017, the Division announced the creation of a Cyber Unit and a Retail 
Strategy Task Force.

The Cyber Unit
To combat cyber-related threats, which are among the greatest risks facing our securities 
markets, the Division formed a Cyber Unit. The Cyber Unit combines Enforcement's 
substantial, existing cyber-related expertise and its proficiency in digital ledger technology. 
The Unit initially will focus its efforts on the following key areas:

•	 Market manipulation schemes involving false information spread through electronic 
and social media;

•	 Hacking to obtain material nonpublic information and trading on that information;

•	 Violations involving distributed ledger technology and initial coin offerings (ICOs);

•	 Misconduct perpetrated using the dark web;

•	 Intrusions into retail brokerage accounts; and

•	 Cyber-related threats to trading platforms and other critical market infrastructure.



DIVISION OF ENFORCEMENT ANNUAL REPORT   |   5

 
 

Although Enforcement has been focused on many of these issues for some time, the Cyber 
Unit formalizes the Division’s efforts to develop and apply the Commission’s considerable 
expertise in this rapidly-developing area.

While the end result of the Division’s work is often a recommendation that the Commis-
sion take enforcement action, we also pursue alternatives where appropriate. The 
Division’s recent activity in cyber-related actions provides two examples. First, in recogni-
tion of the growing use of distributed ledger technology and ICOs, in July 2017, the 
Commission released a Report of Investigation that concluded that the federal securities 
laws may apply to certain initial coin offerings or other distributed ledger or blockchain-
enabled means for raising capital, depending on the facts and circumstance.1 Second, in 
early November 2017, Enforcement and the Commission’s Office of Compliance Inspec-
tions and Examinations (OCIE) issued a public statement concerning endorsements of 
stocks and other investments by celebrities and others on social media networks.2 

The Retail Strategy Task Force
Effective enforcement of the federal securities laws is critical to safeguarding the long-term 
interests of retail investors. To focus the Division on the type of misconduct that often 
targets retail investors, the Division formed the Retail Strategy Task Force. The Task 
Force will be dedicated to developing effective strategies and methods to identify potential 
harm to retail investors. The Task Force builds on the Division’s past efforts to protect 
retail investors and will draw from the Division’s deep experience in the area. It is focused, 
in particular, on harnessing the Commission’s ability to use technology and data analyt-
ics to identify large-scale wrongdoing. The Task Force also works closely with OCIE to 
identify areas of risk to retail investors, and with the Commission’s Office of Investor 
Education and Advocacy to educate retail investors about those risks.

The Task Force will focus on wrongdoing implicating the microcap market, as well as 
Ponzi schemes and offering frauds, where victims typically are retail investors. But the 
Task Force also will focus on identifying misconduct in other areas, such as that which 
occurs at the intersection of investment professionals and retail investors, which can 
present significant opportunity for misconduct. Some examples of this type of miscon-
duct include steering clients to higher-cost mutual fund share classes, abuses in wrap-
fee accounts, investment adviser recommendations to buy and hold highly volatile 
products like inverse exchange-traded funds, suitability issues involving the sale of 
structured products to retail investors, and abusive sales practices such as churning and 
excessive trading.

1	 www.sec.gov/litigation/investreport/34-81207.pdf.
2	 www.sec.gov/news/public-statement/statement-potentially-unlawful-promotion-icos.

http://www.sec.gov/litigation/investreport/34-81207.pdf
http://www.sec.gov/news/public-statement/statement-potentially-unlawful-promotion-icos


6   |   U.S. SECURITIES AND EXCHANGE COMMISSION

DISCUSSION AND ANALYSIS OF  
FISCAL YEAR 2017
Overall Results
Even in the midst of transition in leadership, FY 2017 was a successful and impactful year 
for the Enforcement Division. The Commission brought a diverse mix of 754 enforce-
ment actions, of which:

•	 446 were “standalone” actions brought in federal court or as administrative proceedings;

•	 196 were “follow-on” proceedings seeking bars based on the outcome of Commission 
actions or actions by criminal authorities or other regulators; and

•	 112 were proceedings to deregister public companies—typically microcap—that were 
delinquent in their Commission filings.

Detailed results from FY 2017 are set forth below. FY 2016 results are also reflected 
below for comparison. 

The number of standalone enforcement actions decreased in FY 2017 when compared 
to FY 2016. The bulk of that difference is attributable to 84 actions brought in FY 2016 
(roughly 15 percent of standalone actions that year) as part of the Commission’s Munici-
palities Continuing Disclosure Cooperation (MCDC) Initiative, a voluntary self-reporting 
program that targeted material misstatements and omissions in municipal bond offering 
documents. The MCDC Initiative concluded in FY 2016.

Enforcement Actions Filed in  
Fiscal Year 2017 and 2016  

(Including MCDC)

FY 2017 FY 2016

Standalone Enforcement Actions 446 548

Follow-on Admin. Proceedings 196 195

Delinquent Filings 112 125

Total Actions 754 868

Enforcement Actions Filed in 
 Fiscal Year 2017 and 2016  

(Excluding MCDC)

FY 2017 FY 2016

Standalone Enforcement Actions 446 464

Follow-on Admin. Proceedings 196 195

Delinquent Filings 112 125

Total Actions 754 784



DIVISION OF ENFORCEMENT ANNUAL REPORT   |   7

Types of Cases
As the chart below illustrates, consistent with FY 2016, a significant number of the 
Commission’s 446 standalone cases in FY 2017 concerned investment advisory issues, 
securities offerings, and issuer reporting/accounting and auditing, each comprising 
approximately 20 percent of the overall number of standalone actions. The Commission 
also continued to bring actions relating to market manipulation, insider trading, and 
broker-dealers, with each comprising approximately 10 percent of the overall number of 
standalone actions, as well as other areas.

0 20 40 60 80 100

Actions Filed

2016

2017

Issuer Reporting / 
Audit & Accounting

Securities Offering

Inv. Adviser / Inv. Company

Broker Dealer

Insider Trading

Market Manipulation

Public Finance Abuse

FCPA

Miscellaneous

Transfer Agent

NRSRO

A breakdown of the number and percentage of the types of actions brought in FY 2016 
and 2017 is in the attached appendix.

Disgorgement and Penalties Ordered
In FY 2017, the Commission continued to obtain significant monetary judgments against 
parties in enforcement actions. All told, parties in the Commission’s actions and proceed-
ings were ordered to pay a total of $2.9 
billion in disgorgement of ill-gotten gains, 
an increase over the prior year. Penalties 
imposed totaled $832 million, a decrease 
from the prior year. Total monetary relief 
ordered in FY 2017 declined approxi-
mately seven percent from the prior year.

Total Money Ordered (in millions)

FY 2017 FY 2016

Penalties $832 $1,273

Disgorgement $2,957 $2,809

Total $3,789 $4,083



8   |   U.S. SECURITIES AND EXCHANGE COMMISSION

As the below tables demonstrate, the five percent of cases that involve the largest penalties 
and disgorgement account for the vast majority of all financial remedies the Commission 
obtains. Yet the remaining 95 percent of cases not only constitute the bulk of the Enforce-
ment Division’s overall activity, but also address the broadest array of conduct. This is one 
illustration of how statistical assessments present an incomplete picture.

Penalties Ordered (in Millions)

2017 2016

Total Pct Total Pct

Top 5% Largest Cases $514 62%   $954 75%

Remaining 95% Cases $318 38%   $320 25%

Total $832 100% $1,274 100%

Disgorgement Ordered (in Millions)

2017 2016

Total Pct Total Pct

Top 5% Largest Cases $2,046 69% $1,848 66%

Remaining 95% Cases    $911 31%   $961 34%

Total $2,957 100% $2,809 100%



DIVISION OF ENFORCEMENT ANNUAL REPORT   |   9

Experience has shown that in most years, a significant percentage of the disgorgement 
and penalty totals are attributed to a small number of cases. As illustrated below, this was 
the case in FY 2016 and 2017.

Disgorgement Orders Over $100 Million in Fiscal Year 2017

Party Amount

Telia Company AB $457 million 

Braskem S.A. $325 million 

Teva Pharm. Industries Ltd. $236 million 

Steve Chen, et al. $145 million 

JPMorgan Chase & Co. $131 million 

Total Disgorgement Orders Over $100 M $1.294 billion

Percentage of Total Disgorgement Ordered in FY 2017 44%

Disgorgement Orders Over $100 Million in Fiscal Year 2016

Party Amount

JPMorgan Chase Bank, N.A., et al. $139 million 

Trevor G. Cook, et al. $264 million 

Louis V. Schooler $148 million 

VimpelCom Ltd. $375 million 

The Bank of New York Mellon $133 million 

Och-Ziff Capital Mgmt Group LLC, et al. $201 million 

Total Disgorgement Orders Over $100 M $1.260 billion

Percentage of Total Disgorgement Ordered in FY 2016 45%



10   |   U.S. SECURITIES AND EXCHANGE COMMISSION

Penalty Orders Over $50 Million in Fiscal Year 2017

Party Amount

Credit Suisse AG $90 million 

State Street Bank & Trust Co. $75 million 

Ming Xu $57 million 

Total Penalty Orders Over $50 Million $222 million

Percentage of Total Penalties Ordered in FY 2017 27%

Penalty Orders Over $50 Million in Fiscal Year 2016

Party Amount

Merrill Lynch $358 million 

Weatherford Int’l $140 million

JPMorgan Chase Bank, N.A., et al. $128 million 

Monsanto Company $ 80 million

Total Penalty Orders Over $50 Million $706 million

Percentage of Total Penalties Ordered in FY 2016 55%

More information about the actions that led to these disgorgement and penalty orders is 
available in the appendix.



DIVISION OF ENFORCEMENT ANNUAL REPORT   |   11

Finally, a substantial amount of money was returned to harmed investors in FY 2017. 
In the past two years combined, the Commission distributed $1.21 billion to victims of 
wrongdoing. The majority of funds were distributed in FY 2017, when the Commission 
returned a record $1.07 billion to harmed investors.

Money Distributed to 
Harmed Investors  

(in millions)

FY 2017 FY 2016 

$1,073 $140 

A significant portion of the total funds distributed in FY 2017 
($814 million) came from four Fair Funds—a $494 million 
disbursement from the CR Intrinsic Investors fund,3 a $200 
million disbursement from a JPMorgan Chase fund,4 and a 
$120 million disbursement from two related Credit Suisse 
RMBS funds.5 The balance of the funds distributed in  

FY 2017 ($259 million) came from 48 other distribution funds comprised of 28 Fair 
Funds ($242 million) and 20 Disgorgement Funds ($17 million).

Individual Accountability
Individual accountability is critical to an effective enforcement program. In FY 2017,  
73 percent of the Commission’s standalone actions involved charges against one or more 
individuals, the same percentage as in FY 2016 (excluding the 84 actions attributable to 
the MCDC Initiative).6 

Relief Obtained
In every enforcement action, the Division seeks appropriately tailored sanctions that 
further enforcement goals. In addition to disgorgement and penalties, there are a wide 
array of potential remedies available. In each case, the Division seeks those remedies that 
will be the most meaningful. Some of these remedies are discussed in more detail below.

Trading Suspensions
Under the federal securities laws, the Commission can suspend trading in a stock for  
10 days and generally prohibit a broker-dealer from soliciting investors to buy or sell the 
stock again until certain reporting requirements are met. Trading suspensions are a signifi-
cant enforcement tool and greatly enhance our ability to protect investors from possible 
fraud. In FY 2017, the Commission suspended trading in the securities of 309 issuers, a 
55 percent increase over FY 2016, in order to combat potential market manipulation and 
microcap fraud threats to investors.

3  SEC v. CR Intrinsic Investors, LLC, et al., No. 12-cv-8466 (S.D.N.Y.).
4  JPMorgan Chase & Co., Administrative Proceeding File No. 3-15507.
5  Credit Suisse Securities USA, LLC, et al., Administrative Proceeding File No. 3-15098
6  When MCDC-related actions are included in FY 2016’s count, 61 percent of the Commission’s standalone actions

involved charges against one or more individuals.



12   |   U.S. SECURITIES AND EXCHANGE COMMISSION

Court-Ordered Asset Freezes
Court-ordered prejudgment relief in the form of asset freezes is important to the Commis-
sion’s ability to protect investors. These freezes prevent alleged wrongdoers from dissipat-
ing assets that could be distributed to harmed investors. Wrongdoers often are adept at 
hiding and moving assets offshore, and the Commission’s ability to obtain meaningful 
financial remedies, and to return money to harmed investors, therefore may depend on 
the ability to obtain an asset freeze at an early stage. These circumstances require seeking 
federal court action on an emergency basis. In FY 2017, the Commission sought 35 
court-ordered asset freezes, a slight increase from FY 2016, when the Commission sought 
33 asset freezes.

Bars and Suspensions Imposed
Bars and suspensions also are invaluable tools. One of the most important things that 
the Commission can do proactively to protect investors and the market is to remove bad 
actors from positions where they can engage in future wrongdoing. Bars and suspensions 
are the means by which the Commission prevents wrongdoers from serving as officers or 
directors of public companies, dealing in penny stocks, associating with registered entities 
such as broker-dealers and investment advisers, or appearing or practicing before the 
Commission as accountants or attorneys.

Enforcement actions resulted in over 625 bars and suspensions of wrongdoers in FY 2017 
and over 650 bars and suspensions in FY 2016.

Noteworthy Enforcement Actions
While the Division’s efforts resulted in many noteworthy enforcement actions in FY 2017, 
the matters described below give a sense of some of the actions the Commission brought 
in areas of the Division’s greatest focus, as well as actions in other areas to demonstrate 
the breadth of the landscape the Division covers.

In FY 2017, the Commission brought charges against:

Direct Impact on Retail Investors and Conduct of Registrants

•	 Thirteen individuals allegedly involved in two Long Island-based cold calling scams that 
bilked more than 100 victims out of more than $10 million through high-pressure sales 
tactics and lies about penny stocks.7 

•	 Twenty-seven individuals and entities behind various alleged stock promotion schemes 
that left investors with the impression they were reading independent, unbiased analyses 
on investing websites while writers actually were being secretly compensated for touting 
company stock.8 

•	 Barclays Capital for charging improper advisory fees and mutual fund sales charges to 
clients, who were overcharged by nearly $50 million. The firm agreed to pay more than 
$97 million in disgorgement and penalties to settle the Commission’s claims.9 

7	 www.sec.gov/news/press-release/2017-124.
8	 www.sec.gov/news/press-release/2017-79.
9	 www.sec.gov/news/press-release/2017-98.

http://www.sec.gov/news/press-release/2017-124
http://www.sec.gov/news/press-release/2017-79
http://www.sec.gov/news/press-release/2017-98


DIVISION OF ENFORCEMENT ANNUAL REPORT   |   13

•	 Morgan Stanley Smith Barney related to single inverse ETF investments it recom-
mended to advisory clients. The firm agreed to pay an $8 million penalty and admit 
wrongdoing to settle these charges.10 

•	 The investment services subsidiary of SunTrust Banks for collecting more than  
$1.1 million in avoidable fees from clients by improperly recommending more expen-
sive share classes of various mutual funds when cheaper shares of the same funds 
were available. The firm agreed to pay a $1.1 million penalty to settle the charges, and 
separately began refunding the overcharged fees plus interest to affected clients after the 
Division’s investigation began.11 

•	 Investment management firm Pacific Investment Management Company for misleading 
investors about the performance of one its first actively managed exchange-traded funds 
and failing to accurately value certain fund securities. The firm agreed to retain an 
independent compliance consultant and pay nearly $20 million to settle the charges.12 

•	 BNY Mellon for miscalculating its risk-based capital ratios and risk-weighted assets 
reported to investors. The firm agreed to pay a $6.6 million penalty.13 

•	 Three New York-based brokers for allegedly making unsuitable recommendations that 
resulted in substantial losses to customers and hefty commissions for the brokers. One 
of the brokers agreed to pay more than $400,000 to settle the charges.14 

•	 Two New York-based brokers with allegedly fraudulently using an in-and-out trading 
strategy that was unsuitable for customers in order to generate substantial commissions 
for themselves.15 

Cyber-Related Misconduct

•	 Three Chinese traders for allegedly trading on hacked, nonpublic, market-moving 
information stolen from two prominent law firms, making almost $3 million in  
illegal profits.16 

•	 A Virginia-based mechanical engineer for allegedly scheming to manipulate the price  
of Fitbit stock by making a phony regulatory filing.17 

 
Insider Trading

•	 A partner at a Hong Kong-based private equity firm who allegedly amassed more than 
$29 million in illegal profits by insider trading in advance of the April 2016 acquisition 
of DreamWorks Animation SKG Inc. by Comcast Corp.18 

•	 A former government employee turned political intelligence consultant and three others 
for engaging in an alleged insider trading scheme involving tips of nonpublic informa-
tion about government plans to cut Medicare reimbursement rates, which affected the 
stock prices of certain publicly traded medical providers or suppliers.19 

10	www.sec.gov/news/pressrelease/2017-46.html.
11	www.sec.gov/news/press-release/2017-165.
12	www.sec.gov/news/pressrelease/2016-252.html.
13	www.sec.gov/news/pressrelease/2017-9.html.
14	www.sec.gov/news/press-release/2017-180.
15	www.sec.gov/news/pressrelease/2017-2.html.
16	www.sec.gov/news/pressrelease/2016-280.html.
17	www.sec.gov/news/press-release/2017-107.
18	www.sec.gov/news/pressrelease/2017-44.html.
19	www.sec.gov/news/press-release/2017-109.

http://www.sec.gov/news/pressrelease/2017-46.html
http://www.sec.gov/news/press-release/2017-165
http://www.sec.gov/news/pressrelease/2016-252.html
http://www.sec.gov/news/pressrelease/2017-9.html
http://www.sec.gov/news/press-release/2017-180
http://www.sec.gov/news/pressrelease/2017-2.html
http://www.sec.gov/news/pressrelease/2016-280.html
http://www.sec.gov/news/press-release/2017-107
http://www.sec.gov/news/pressrelease/2017-44.html
http://www.sec.gov/news/press-release/2017-109


14   |   U.S. SECURITIES AND EXCHANGE COMMISSION

Issuer Reporting and Disclosure Issues and Auditor Misconduct

•	 Ernst & Young LLP, which agreed to pay more than $11.8 million to settle claims 
related to failed audits of an oil services company that used deceptive income tax 
accounting to inflate earnings, as well as two of the firm’s partners, who agreed to 
suspensions from practicing before the Commission.20 

•	 KPMG LLP and an audit partner for failing to properly audit the financial statements 
of an oil and gas company, resulting in investors being misinformed about the energy 
company’s value. The firm agreed to pay more than $6.2 million to settle the charges, 
and the audit partner agreed to a suspension from appearing and practicing before the 
Commission.21 

•	 Canadian-based oil and gas company Penn West Petroleum Ltd. and three of its former 
top finance executives for their roles in an extensive, multi-year accounting fraud.22 

Other Noteworthy Actions

•	 Petrochemical manufacturer Braskem S.A. for creating false books and records to 
conceal millions of dollars in illicit bribes paid to Brazilian government officials to win 
or retain business. The entity settled by paying $957 million to the Commission, the 
U.S. Department of Justice (DOJ), and authorities in Brazil and Switzerland.23 

•	 Sweden-based telecommunications provider Telia Company AB related to violations 
of the Foreign Corrupt Practices Act (FCPA) to win business in Uzbekistan, which the 
entity settled by paying $956 million to the Commission, DOJ, and Dutch and Swedish 
law enforcement.24 

•	 A former official of the nation’s third-largest public pension fund and two brokers 
accused of orchestrating a pay-to-play scheme to steer billions of dollars to certain firms 
in exchange for luxury gifts, lavish vacations, and tens of thousands of dollars spent on 
illegal narcotics and prostitutes.25 

•	 Citadel Securities LLC, which agreed to pay $22.6 million to settle claims that its 
business unit handling retail customer orders from other brokerage firms made mislead-
ing statements to them about the way it priced trades.26 	

•	 A businessman and two companies for defrauding investors in a pair of so-called ICOs 
purportedly backed by investments in real estate and diamonds.27 

•	 A Ukraine-based trading firm, Avalon FA Ltd., accused of manipulating the U.S. 
markets hundreds of thousands of times and the New York-based brokerage firm of 
Lek Securities and its CEO who allegedly helped make it possible.28

20	www.sec.gov/news/pressrelease/2016-219.html.
21	www.sec.gov/news/press-release/2017-142.
22	www.sec.gov/news/press-release/2017-120. 
23	www.sec.gov/news/pressrelease/2016-271.html.
24	www.sec.gov/news/press-release/2017-171.
25	www.sec.gov/news/pressrelease/2016-272.html.
26	www.sec.gov/news/pressrelease/2017-11.html.
27	www.sec.gov/news/press-release/2017-185-0.
28	www.sec.gov/news/pressrelease/2017-63.html.

http://www.sec.gov/news/pressrelease/2016-219.html
http://www.sec.gov/news/press-release/2017-142
http://www.sec.gov/news/press-release/2017-120
http://www.sec.gov/news/pressrelease/2016-271.html
http://www.sec.gov/news/press-release/2017-171
http://www.sec.gov/news/pressrelease/2016-272.html
http://www.sec.gov/news/pressrelease/2017-11.html
http://www.sec.gov/news/press-release/2017-185-0
http://www.sec.gov/news/pressrelease/2017-63.html


DIVISION OF ENFORCEMENT ANNUAL REPORT   |   15

Breakdown of Classification of Standalone Enforcement Actions

2017 2016

Actions Pct Actions Pct

Issuer Reporting / Audit & Accounting 95 21% 93 17%

Securities Offering 94 21% 90 16%

Inv. Adviser / Inv. Company 82 18% 98 18%

Broker Dealer 53 12% 61 11%

Market Manipulation 41 9% 30 5%

Insider Trading 41 9% 45 8%

Public Finance Abuse 17 4% 97 18%

FCPA 13 3% 21 4%

Miscellaneous 7 2% 9 2%

Transfer Agent 3 1% 2 0%

NRSRO 0 0% 2 0%

Total 446 100% 548 100%

Disgorgement Orders over $100 Million Entered in Fiscal Year 2017

Party Link to Release

Steve Chen, et al. www.sec.gov/news/pressrelease/2015-227.html 

JPMorgan Chase & Co. www.sec.gov/news/pressrelease/2016-241.html 

Braskem S.A. www.sec.gov/news/pressrelease/2016-271.html 

Teva Pharmaceutical Industries Ltd. www.sec.gov/news/pressrelease/2016-277.html 

Telia Company AB www.sec.gov/news/press-release/2017-171 

Penalty Orders over $50 Million Entered in Fiscal Year 2017

Party Link to Release

Ming Xu www.sec.gov/news/press-release/2014-60 

Credit Suisse AG www.sec.gov/news/pressrelease/2016-210.html 

State Street Bank & Trust Co. www.sec.gov/litigation/admin/2016/ic-32390-s.pdf 

APPENDIX

http://www.sec.gov/news/pressrelease/2015-227.html
http://www.sec.gov/news/pressrelease/2016-241.html 
http://www.sec.gov/news/pressrelease/2016-271.html 
http://www.sec.gov/news/pressrelease/2016-277.html 
http://www.sec.gov/news/press-release/2017-171
http://www.sec.gov/news/press-release/2014-60
http://www.sec.gov/news/pressrelease/2016-210.html
http://www.sec.gov/litigation/admin/2016/ic-32390-s.pdf 


16   |   U.S. SECURITIES AND EXCHANGE COMMISSION

Disgorgement Orders over $100 Million Entered in Fiscal Year 2016

Party Link to Release

Trevor G. Cook, et al. www.sec.gov/litigation/litreleases/2009/lr21313.htm

Louis V. Schooler www.sec.gov/news/press-release/2012-2012-183htm 

JPMorgan Chase Bank, N.A., et al. www.sec.gov/news/pressrelease/2015-283.html 

The Bank of New York Mellon www.sec.gov/litigation/admin/2016/ic-32151-s.pdf

VimpelCom Ltd. www.sec.gov/news/pressrelease/2016-34.html

Och-Ziff Capital Management Group 
LLC, et al.

www.sec.gov/news/pressrelease/2016-203.html

Penalty Orders over $50 Million Entered in Fiscal Year 2016

Party Link to Release

Merrill Lynch, Pierce, Fenner & Smith 
Inc., et al.

www.sec.gov/news/pressrelease/2016-128.html 

Weatherford International PLC, et al. www.sec.gov/news/pressrelease/2016-194.html 

JPMorgan Chase Bank, N.A., et al. www.sec.gov/news/pressrelease/2015-283.html 

Monsanto Company www.sec.gov/news/pressrelease/2016-25.html 

VimpelCom Ltd. www.sec.gov/news/pressrelease/2016-34.html 

Och-Ziff Capital Management Group 
LLC, et al.

www.sec.gov/news/pressrelease/2016-203.html 

http://www.sec.gov/litigation/litreleases/2009/lr21313.htm
http://www.sec.gov/news/press-release/2012-2012-183htm 
http://www.sec.gov/news/pressrelease/2015-283.html
http://www.sec.gov/litigation/admin/2016/ic-32151-s.pdf
http://www.sec.gov/news/pressrelease/2016-34.html
http://www.sec.gov/news/pressrelease/2016-203.html
http://www.sec.gov/news/pressrelease/2016-128.html
http://www.sec.gov/news/pressrelease/2016-194.html
http://www.sec.gov/news/pressrelease/2015-283.html
http://www.sec.gov/news/pressrelease/2016-25.html 
http://www.sec.gov/news/pressrelease/2016-34.html 
http://www.sec.gov/news/pressrelease/2016-203.html