In our 2021 Year-End Review, we noted that the Division of Enforcement under this Administration had outlined its vision of aggressive, heightened enforcement through an escalation of existing remedies, including increased penalties, individual bars and admissions. The first half of 2022 reflected the Enforcement Division pursuing the playbook as forecasted.
In the first half of 2022, the Commission filed complaints or settled matters in many of its priority areas, such as digital assets and environmental, social and governance (“ESG”) disclosures, and assessed significantly heightened monetary penalties.[1]
The Commission also brought its first substantive enforcement action involving Regulation Best Interest (“Reg BI”).[2] Reg BI—which establishes a “best interest” standard for investment recommendations by broker-dealers and investment advisers—went into effect on June 20, 2020, and abrogates the prior suitability standard. The SEC filed a complaint relating to the sale of allegedly high-risk bonds to a number of retail customers alleging, among other things, that the broker-dealer did not conduct adequate diligence on the bonds, did not adequately advise its brokers of the risks, and did not have adequate policies and procedures for compliance with Reg BI.
The Commission’s Reg BI action is also an example of its continuing emphasis on naming and/or charging...
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