Regulatory news
Q4 2024 enforcements: A closer look at where regulators took action
Ben Parker
•
Chief Executive Officer & Founder
January 20, 2025
As the regulatory landscape continues to evolve, the enforcement actions taken in Q4 2024 provide an essential overview of where regulators are focusing their efforts and the consequences for non-compliance. From substantial fines to operational mandates, the final quarter of 2024 highlighted several trends that financial firms should be aware of heading into the new year.
Overall trends:
The final quarter of 2024 witnessed a continuation of the robust enforcement trends that have defined the year. While the total number of enforcement actions remained consistent with previous quarters, the focus has shifted to specific areas such as market manipulation, cross-border breaches, and failures in electronic communications (eComms) surveillance.
Total fines and sanctions:
In Q4 2024, regulators across the globe imposed fines exceeding $80 million. This figure reflects the growing focus on financial penalties as a deterrent against non-compliance. While much of the enforcement activity continues to be driven by the SEC and CFTC in the US, European and Asia-Pacific regulators have also ramped up their efforts, signalling a more coordinated global enforcement approach.
Market manipulation:
The biggest area of focus for regulators remains market manipulation, with numerous enforcement actions being taken against firms found to have engaged in spoofing, layering, and other manipulative practices. Notably, several high-profile cases involved algorithmic trading strategies that were found to artificially inflate or deflate asset prices, attracting the attention of both domestic and international regulators.
eComms surveillance failures:
Following the significant wave of enforcements related to off-channel communications earlier in the year, Q4 2024 saw a continuation of these actions, particularly from the SEC. Firms were penalised for inadequate monitoring of employee communications across platforms such as WhatsApp, Signal, and other personal messaging services. The penalties ranged from millions in fines to mandated enhancements in communications surveillance capabilities.
Cross-border regulatory breaches:
Another emerging enforcement theme was cross-border regulatory compliance. With the globalisation of financial markets, firms operating across multiple jurisdictions have faced increased scrutiny to ensure their compliance systems are capable of meeting the requirements of each market. This includes adhering to local reporting standards and maintaining adequate surveillance capabilities for both domestic and international trades.
SEC enforcement against eComms lapses (US):
The SEC continued its crackdown on eComms violations, fining several firms for failing to adequately monitor employee communications. One major financial institution faced a $50 million penalty for systemic failures in recording and archiving employee communications, in breach of Rule 17a-4 under the Securities Exchange Act of 1934.
ESMA's response to market manipulation (EU):
The European Securities and Markets Authority (ESMA) coordinated with national regulators across the EU to bring multiple enforcement actions against firms involved in market manipulation. Notable cases included a significant fine issued by the French AMF against a trading firm for spoofing activities in derivatives markets.
MAS enforcement against insider trading (Asia-Pacific):
In Singapore, the Monetary Authority of Singapore (MAS) continued its efforts to combat insider trading. A notable enforcement action involved the prosecution of several individuals connected to the misuse of material non-public information in relation to equity markets, highlighting the need for firms operating in the region to strengthen their surveillance capabilities.
Strengthening eComms monitoring: The ongoing regulatory focus on eComms surveillance makes it clear that firms must invest in comprehensive monitoring solutions that cover all communication channels used by employees. This includes both traditional email systems and newer messaging platforms, ensuring that all communications are recorded, archived, and accessible for regulatory review.
Cross-border compliance: As regulators increase their cross-border enforcement activities, firms must ensure their compliance systems are equipped to handle the complexities of operating across multiple jurisdictions. This includes staying up to date with the latest regulatory developments in each market and maintaining robust surveillance tools that can adapt to varying requirements.
Proactive market surveillance: The continued focus on market manipulation underscores the importance of proactive market surveillance. Firms should ensure their surveillance systems are capable of detecting and flagging suspicious activities in real-time, particularly in relation to algorithmic trading strategies and complex market practices.
As we move into 2025, the enforcement trends from Q4 2024 are likely to intensify. Regulators have made it clear that they will continue to focus on areas such as eComms surveillance, market manipulation, and cross-border compliance. Firms that have yet to enhance their compliance infrastructure should prioritise doing so, with a focus on deploying advanced surveillance technologies and ensuring that their systems are adaptable to the evolving regulatory landscape.
This latest enforcement update highlights the importance of staying ahead of regulatory expectations and investing in the right tools and processes to ensure compliance.
