The U.S. Securities and Exchange Commission recovered $794 million for harmed investors and obtained judgments and orders totaling nearly $4 billion in disgorgement and penalties during Fiscal Year 2018, according to the latest annual report from the agency's enforcement division.

The report stresses the division's intent to protect individual investors, push for accountability and keep pace with technology. And it shows that the SEC's enforcement arm “has been and continues to be extremely successful in its efforts to deter bad conduct and effectively remedy harms to investors,” SEC chairman Jay Clayton said in a prepared statement.

The bulk of the SEC's enforcement actions this year dealt with securities offerings, which accounted for about 25 percent of the agency's cases. Investment advisory issues ranked a close second and made up about 22 percent of the SEC's enforcement activity. Accounting and auditing issues were the third most common cases followed by broker-dealer misconduct, insider trading and market manipulation.

Here are five key takeaways from the report:

  • New approach to compliance: The SEC said it leveraged its undertakings (compliance) enforcement tool, which requires defendants to take steps to comply with the specific terms of a court order, in novel ways in two high-profile cases involving Tesla and Theranos Inc. The agency forced Theranos CEO Elizabeth Holmes to relinquish voting control over the blood-testing company. She also had to guarantee that she wouldn't profit from a sale of the now-defunct company until $750 million was returned to those who were duped into
    Elizabeth Holmes.
    Photo: Shutterstock

    investing in Theranos. In the Tesla case, the SEC required CEO Elon Musk to resign as chairman and take several other compliance actions, including hiring independent directors to oversee the CEO's public statements about the company, after Musk tweeted that he was thinking about taking Tesla private.

  • Eyes on cryptocurrency: The Enforcement Division has been teaming up with the SEC's new Cyber Unit to go after ne'er-do-wells who are meddling in digital assets and initial coin offerings. The agencies have used the SEC's trading suspension authority along with public statements to deter misconduct and educate investors. This year, the SEC brought more than a dozen enforcement actions related to ICOs and cryptocurrency and opened many more investigations that remain active.  
  • Serious push to protect retail investors: More than half of the agency's stand-alone actions this year involved wrongdoing against individual investors in cases that centered on fees and expenses and conflicts of interest for managed accounts; market manipulations; and fraud in unregistered offerings. Several actions centered on Ponzi schemes that tricked investors out of millions of dollars, according to the SEC.
  • Cybercrime is a growing concern: The SEC formed a Cyber Unit late last year as part of an effort to crack down on cyberattacks. This year, the agency had more than 225 active investigations. In one case, the SEC alleged that false regulatory filings were used to manipulate the price of Fitbit stock. Another enforcement action targeted a day trader in Philadelphia accused of raking in at least $700,000 through a scheme that involved accessing the brokerage accounts of more than 100 victims to make unauthorized trades to inflate the stock prices of various companies.
  • Doing more with less: The SEC has been dealing with a hiring freeze that began in 2016. Since then the number of employees and contractors at the agency has dropped by about 10 percent. But the agency's enforcement activity increased this year, when it filed 821 actions, compared with 754 last year.

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