The Largest SEC Fraud Settlements to Date

The Foreign Corrupt Practices Act (FCPA) was enacted by the U.S. Department of Justice (DOJ) and the Securities Exchange Commission (SEC) to serve a few key anti-bribery and accounting purposes.

The U.S. Securities and Exchange Commission (SEC) enforces the law as it applies to market manipulation. In doing so, the SEC protects consumers when individuals or corporations attempt to commit fraud by taking advantage of or misleading them through different marketing tactics.

The SEC often enforces fair market laws under the Customer Protection Rule, which requires “registered brokers-dealers to safeguard the investment assets of their customers.” The rule exists to protect consumers’ finances in the event the investment firm fails or underperforms.

Fraud occurs when the investment firms fail to accurately portray the health of their investments, thus misleading consumers to believe their funds are in solid financial shape. When investment agencies knowingly misguide their clients, they commit fraud by jeopardizing assets for their own financial gain. Industries where this fraud occurs can include hedge funds, wall street, marketplace lending, investment banking, fintech, valuation, and credit rating agencies.

In 2019, corporate FCPA enforcement set an all-time high with over $2.65 billion in penalties. Additionally, that year, the DOJ and the SEC imposed the two largest FCPA corporate penalties, including the first billion-dollar settlement in FCPA history. The year 2020 saw a record level of $2.78 billion in penalties and fines for FCPA violations. Additionally, there were billions of dollars recovered by the DOJ and SEC in cooperation with other countries for similar violations.

Here are just 3 of the largest settlements or fines issued by the SEC to date.

  • $550 million – Goldman Sachs
    • In 2010, the SEC ordered investment and financial services leader Goldman Sachs & Co. to pay a record $550 million to reform its business practices that had “misled investors in a subprime mortgage product.” In the height of the “Great Recession,” the SEC alleged that Goldman “misstated and omitted key facts” regarding a product they marketed which meant their investors were misguided and made financial decisions that were not in their best interest.
  • $415 million – Merrill Lynch
    • In 2016, an SEC investigation found investment management company Merrill Lynch committed fraud and violating the Customer Protection Rule by “misusing customer cash that rightfully should have been deposited in a reserve account.” Merrill Lynch misued their investors funds to finance their own trading activities. Merrill Lynch admitted their wrongdoing and agreed to pay $415 million to settle the charges.
  • $200 million JPMorgan Chase
    • In 2013, the SEC charged JPMorgan Chase & Co. with “misstating financial results and lacking effective internal controls to detect and prevent its traders from fraudulently overvaluing investments.” JPMorgan did not effectively communicate its investments’ true values and because of that, led their clients to believe their investments were secure. JPMorgan admitted to the fraud and agreed to pay $200 million.

Do you have valuable information that can help bring fraud to light? If so, we encourage you to speak to our experts today. DJO is comprised of a highly experienced team of lawyers, whistleblower experts, and even former whistleblowers, who strive to deliver the highest monetary reward for brave individuals who have valuable information that can expose fraud.

If a whistleblower’s lawsuit is successful, the reward can be between 15% to 30% of the funds recovered. In most cases, the SEC Whistleblower program offers anonymity to any whistleblower that formally presents a case.

DJO will be there every step of the way to ensure you are safe and your information is confidential so you will have confidence knowing you’re doing the right thing.