2008 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"), Financial Industry Regulatory Authority ("FINRA"), and NYSE Regulation enforcement actions and developments regarding broker-dealers during 2008.

2008 was a year of dramatic change in the securities industry. The markets were roiled by a number of unprecedented economic events, and the most prominent stock market indices lost significant value, with the Dow Jones Industrial Average declining about 34% and the Nasdaq closing down approximately 41% from the end of 2007. The year also saw the demise of several broker-dealers, the merger of others, unprecedented federal capital infusions, and a move away from the independent investment banking model towards that of commercial banks. Investors and regulators also witnessed several major scandals, and the media, Congress, and others called for significant modifications of the current regulatory regime.

2008 was also an eventful year at the SEC. Perhaps most importantly, in mid-December 2008, President-elect Barack Obama announced his intention to nominate current FINRA CEO, Mary Schapiro, to replace Christopher Cox as the Chairman of the Commission.

On the enforcement front, in the SEC's fiscal year 2008, the Commission brought 671 enforcement actions, the second-highest number of actions ever, and a slight increase in comparison to the 656 cases initiated in fiscal year 2007. Of note, however, the statistics include more than twice as many cases against public issuers for untimely regulatory filings in fiscal year 2008 versus fiscal year 2007; many of these cases were initiated in the last month of the Commission's fiscal year. Moreover, in one of its core areas - the regulation of broker-dealers - its case load was down significantly from about 89 cases in fiscal year 2007 to about 60 cases in fiscal year 2008, a decline of approximately 33%.

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