Mapping Misconduct: Looking Back, Looking Ahead – First-of-its-Kind Database Offers Insights into SEC Enforcement

As an SEC Whistleblower Advocate, I have discovered that even the most sophisticated individuals often have questions regarding what constitutes a securities violation and how similar violations have been handled by the SEC in the past. To help our clients to make informed reporting decisions, we have conducted a detailed analysis of SEC enforcement actions involving six of the most common violations – Offering Fraud, Trading & Pricing, Foreign Corrupt Practices Act (FCPA), Municipal Securities, Financial Fraud and Market Manipulation – and built a first-of-its-kind SEC Sanctions Database. Our data comprises actions announced since the enactment of the Sarbanes-Oxley Act in 2002 through September 30, 2012, where monetary sanctions exceeded $1 million–the minimum eligibility threshold for the SEC Whistleblower Program. Our goal was to collect this important information and allow it to be searched by the public (whistleblowers, educators, job seekers, etc.).

Once we built the database, we wanted to better understand where securities violations have occurred, when and exactly how bad they have been. To that end, we have prepared this report, which summarizes some of our more interesting findings. For instance, did you know that of the six common securities violations we examined, the SEC successfully prosecuted 457 enforcement actions where the monetary sanctions exceeded $1 million? Or that enforcement activity has been on the rise, with approximately 57% of all enforcement actions announced within the last five years? And, if there is any doubt about the potential for whistleblowers to earn substantial monetary awards, we found that in the calendar years 2003-2011 the SEC brought 419 successful enforcement actions, with aggregate monetary relief for injured investors in excess of $65 billion. As a bonus feature, where actions involved a corporate defendant, we mapped the actions, analyzed the data by region and added to the analysis recent regional data on ethics.

If you would like to learn more, check out this easy-to-use database. There, you can search actions, without filters, or with them – such as regions, sanction amount or type of violation. All queries appear with a Google mapping feature so you can actually see where actions are concentrated…and where they’re not.

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