2007 Year in Review: SEC and SRO Selected Enforcement Cases and Developments Regarding Broker-Dealers

This outline highlights selected U.S. Securities and Exchange Commission (“SEC” or the “Commission”), NASD, NYSE Regulation, and Financial Industry Regulatory Authority (“FINRA”) enforcement actions and developments in 2007 regarding broker-dealers.

In the SEC’s fiscal year 2007 (stretching between October 1, 2006 and September 30, 2007), the Commission initiated 14% more enforcement actions (656) than in the prior year (574). The civil penalties and disgorgement obtained by the SEC in these matters, however, decreased 52% to $1.6 billion from $3.3 billion in fiscal year 2006. In fact, an analysis of SEC settlements involving financial institutions over the last four Commission fiscal years reveals a significant increase in the imposition of relatively small fines and a dramatic decline in the number of large sanctions.

Specifically focusing on enforcement actions against broker-dealers, in fiscal year 2007 the Commission brought 89 such cases versus 75 last year. This represents 14% of the SEC’s docket, a slight increase from 13% in fiscal year 2006. These figures are significantly down from fiscal year 2004 when 22% of the SEC’s cases involved broker-dealers.

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