SEC, CFTC Combine for $9B+ in Penalties in 2023

Activities like insider trading, market manipulation, AML breaches and record-keeping failures are drawing additional attention and monetary penalties, according to research by the financial services compliance provider, led by the U.S. SEC and CFTC, which combined for more than $9 billion in penalties in 2023.

The analysis looked at financial penalties issued by the SEC, Commodity Futures Trading Commission in the U.S., the UK’s Financial Conduct Authority (FCA), France’s Autorite des Marches Financiers (AMF), the Netherlands’ Authority for the Financial Markets (AFM), Germany’s BaFin and Federal Office of Justice and Singapore’s Monetary Authority of Singapore (MAS).

Here are a few key findings:

• The SEC and CFTC issued a combined $9.2 billion in penalties, including 32 fines for insider trading alone. The $4.3 billion in penalties handed out by the CFTC was an all-time high for that agency.
• FCA fines fell for the first time in seven years to eight fines, compared to 26 in 2022 and 10 in 2021, alongside falling in total value by 75% to £52.8 million in 2023.
• Germany’s financial regulators issued 40 fines in 2023, down 13% from 46 in 2022.
• France’s AMF fined firms €127.9 million, including a single fine of €26 million for market manipulation.
• Netherlands’ AFM issued six fines in total in 2023 worth €17.4 million. When compared to the 2022 total of €903,000, this represents a significant increase. This can be attributed to the 12 million fine issued Rabobank in December 2023.
• The MAS issued two fines in 2023 worth S$7.7 million for breaches of anti-money laundering requirements and misconduct by relationship managers.

In 2023, the SEC filed a total of 784 enforcement actions, a 3% increase compared to 2022. The 96 enforcement actions filed by the CFTC also increased 17% from 2022, indicating a crackdown on smaller firms by both bodies. Penalties from the SEC and CFTC totaled $9.2b billion, which included a joint fine of $549 million against Wall Street banks over the use of WhatsApp employee communications and improper record-keeping practices, part of an ongoing crackdown of ephemeral messaging apps that began in 2021.

Some jurisdictions were less aggressive in their oversight of the financial services industry, as the UK’s FCA fines fell for the first time in several years, while regulatory penalties in Germany also declined, though they increased in France and the Netherlands.

“While fines in Europe did not match the levels of those handed down by the SEC and CFTC, the mood music from regulators, such as the FCA, suggests they could join their U.S. counterparts in pursuing and penalizing financial institutions for WhatsApp and other communications record keeping breaches,” said Matt Smith, SteelEye’s CEO. If this were to take place, we anticipate the fines in Europe to be higher in 2024.”