For the first time, the Securities and Exchange Commission has distributed more than $2 billion in a single calendar year to injured investors as a result of SEC enforcement actions and proceedings.

The SEC reached the milestone with the Nov. 20 distribution of more than $40 million related to an illegal late trading scheme involving Ritchie Capital Management. Other SEC distributions involved charges of accounting fraud, as in a $35 million distribution to Cardinal Health investors (see SEC Distributes $35M to Cardinal Health Investors).

"There is no substitute for returning money to defrauded investors," said Robert Khuzami, director of the SEC's Division of Enforcement, in a statement.

In 2002, the Sarbanes-Oxley Act authorized the SEC to create funds, called Fair Funds, comprising both civil penalties and ill-gotten gains that could be returned to injured investors. Prior to SOX, the SEC could return to investors only ill-gotten gains that had been disgorged by defendants. SOX enabled the SEC to include civil penalties in the distribution funds. The SEC has distributed approximately $6.6 billion in Fair Funds to investors since gaining this authority.

In 2009, distributions to injured investors have been made in 31 cases brought by the SEC, involving illegal conduct ranging from accounting fraud to pump-and-dump schemes to mutual fund market timing. Among the distributions this year were more than $840 million to approximately 257,000 injured AIG investors, more than $320 million to approximately two million injured investors in Alliance Capital mutual funds, and more than $240 million to approximately 700,000 injured Bear Stearns investors.

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