SEC’s Enforcement Results for 2024

SEC Enforcement Report

The SEC has dropped its fiscal year 2024 enforcement report, and the numbers show a mixed bag of activity- a 26% dip in overall enforcement actions offset by a record-breaking $8.2 billion in fines. With landmark cases and a laser focus on emerging risks, this year’s enforcement themes offer a stark warning for Registered Investment Advisers (RIAs) and Broker-Dealers alike.

Here’s what should have your attention as you look at your compliance program moving into 2025.

The Off-Channel Communication Crackdown

The SEC’s continued focus on recordkeeping violations is more than a passing trend—it’s a bulldozer, and regulated entities are squarely in its path. Over $600 million in civil penalties were dished out in FY2024, targeting more than 70 firms. For RIAs and Broker-Dealers, the takeaway is simple: if your communication records don’t comply with federal securities laws, you’re setting yourself up for disaster. Off-channel communications (think WhatsApp or other messaging apps) have become the SEC’s favorite low-hanging fruit.

So what do you need to be doing? Review your recordkeeping practices NOW. If your team is using unmonitored or noncompliant platforms, it’s time to implement policies, technology, and training to get on the right side of the law.

Marketing Rule

The SEC’s enforcement of its Marketing Rule has sharpened its teeth, with over a dozen firms charged in FY2024 for offenses such as promoting hypothetical performance without sufficient safeguards, untrue testimonials, and misleading performance advertising. If you’re relying on flashy numbers to sell your services, you’d better ensure your compliance framework can back it up.

Want to make sure your marketing doesn’t get you into trouble?

• Conduct a full audit of your marketing materials and advertising strategies.

Hypothetical performance claims?

• Scrutinize them for accuracy, relevance, and necessary disclosures.

Testimonials and third-party ratings?

• Ensure proper documentation and compliance with disclosure requirements.

Cybersecurity and Emerging Tech

Cyber breaches, crypto fraud, and misleading AI claims all took center stage in FY2024.

The SEC isn’t just reacting—it’s proactively investigating and charging firms for failing to protect client data or misrepresenting their technological capabilities. Whether it’s crypto, AI, or cybersecurity, transparency and robust internal controls are non-negotiable.

Assess your firm’s use of emerging technologies and review your policies to ensure that your disclosures match reality.

Self-Reporting

Not all headlines are grim.

The SEC rewarded firms that self-reported violations or cooperated during investigations by reducing or even waiving penalties.

Even though self-reporting doesn’t guarantee that you’ll be let off with just a warning, it does generally have a better end outcome than waiting for the SEC to find deficiencies.

So what else can you do to remain compliant?

Staying on top of SEC expectations isn’t easy. It’s a full-time job and shouldn’t just be lumped in with an advisor’s existing job.

The risks are mounting, and the stakes have never been higher. If your compliance feels like an uphill battle, you’re not alone. Whether it’s keeping up your disclosure and filings, ensuring your marketing is bulletproof, or staying ahead of cybersecurity threats, we’ve got your back.

Talk to our team today about our Outsourced Compliance Department services. We’re here to take the stress off your plate so you can focus on what you do best, serving your clients. Book a call on our website here.