SEC Says Enforcement Results are Deterring Violations and Promoting Compliance

Acting Enforcement Director Sanjay Wadhwa touted the broad impact of the SEC's efforts on off-channel communications, whistleblower protection and cooperation credit. He said that these initiatives hold bad actors accountable, deter future violations and promote compliance.

At the Securities Enforcement Forum DC 2024, Mr. Wadhwa said the agency's "off-channel communications" initiative, known informally as the "WhatsApp initiative," targeting firms using unapproved communication channels, has led to significant penalties—over $600 million in 2024 alone and more than $2 billion since 2021. He said the success of the initiative can be seen on the effect on industry behavior, with firms now self-reporting violations and improving compliance practices.

On whistleblower protection, Mr. Wadhwa highlighted recent enforcement actions regarding confidentiality and employment agreements that impede whistleblowers' ability to share with the SEC information about possible securities law violations. He underscored that these actions have led to "the largest penalty on record for a standalone violation of the whistleblower protection rule." (See related coverage.)

Mr. Wadhwa touted the SEC's initiative on incentivizing cooperation between market participants and the agency, noting that in fiscal year 2024, this approach led to quicker case resolutions, reduced penalties and more efficient resource allocation within the agency. He acknowledged skepticism from some in the defense bar regarding the transparency of the SEC's cooperation credit process, including the fact that "we don't have a formal policy that guarantees certain outcomes," but stressed that the Division's focus on cooperation is already yielding positive changes in market conduct.