New Report Offers Insights Into SEC Enforcement

Last week, Cornerstone Research released a new report, SEC Enforcement Activity Against Public Company Defendants, examining SEC actions initiated between fiscal years 2010 and 2015. Utilizing data from the SEC Enforcement Empirical Database, the report offers some detailed insights into SEC enforcement actions in recent years, such as: 

• The number of enforcement actions continues to increase. In fiscal year 2015, the SEC initiated a record 807 actions, which represented a 7% increase over fiscal 2014, and a 10% increase over the median number of actions for fiscal years 2010 through 2015.

• Actions against public company defendants resulted in large penalties and disgorgements. Although actions against public company defendants represented an average of 4% of actions from fiscal 2010 through fiscal 2015, these actions accounted for 18% of all SEC monetary penalties and disgorgements during the period.

• The SEC has increasingly utilized administrative proceedings. In fiscal 2015, 76% of the SEC’s actions against public company defendants were brought as administrative proceedings. The use of administrative proceedings by the SEC to seek penalties, which was enabled by the passage of Dodd-Frank in 2010, has resulted in more streamlined and more prompt decisions according to the SEC. It is worth noting that the use of administrative proceedings is under attack, with many critics questioning the constitutionality of the proceedings. The resolution of these challenges may negatively impact the number and type of cases that are brought administratively by the SEC.

This report provides evidence of the powerful impact of law enforcement following the passage of Dodd-Frank, highlighting the SEC’s determination to utilize all tools at its disposal in order to prevent corruption and to seek out wrongdoing wherever it occurs.