SEC Enforcement Activity—Strong Through First Half of FY 2017

David F. Marcus is Senior Vice President and Sara E. Gilley is a Principal at Cornerstone Research. This post is based on a Cornerstone publication.

Despite the uncertainty introduced by changes in SEC leadership and the new administration, enforcement activity continued at a strong pace during the first half of FY 2017 (October 1, 2016–March 31, 2017).

Total Number of SEC Enforcement Actions Filed

  • The SEC filed 334 total enforcement actions during the first half of FY 2017, compared to 372 during the same period in the previous fiscal year.
  • Excluding actions against delinquent filers, the number of enforcement actions in the first half of FY 2017 was 299—virtually unchanged from the same period in the prior fiscal year.
  • The SEC continued to file the vast majority of its actions (80 percent) as administrative proceedings rather than civil actions.

New SEC Enforcement Actions and Follow-On Administrative Proceedings

The SEC filed a comparable number of enforcement actions for new matters and follow-on administrative proceedings during the first half of FY 2017 relative to the first half of FY 2016 (excluding actions against delinquent filers).

  • The SEC filed 231 actions for new matters during the first half of FY 2017, slightly higher than the 225 actions filed during the same period in FY 2016.
  • The SEC filed 68 follow-on actions (administrative proceedings related to previously filed cases) during the first half of FY 2017, compared to 77 in the first half of FY 2016.
  • Follow-on actions comprised 20 percent of total enforcement activity in the first half of FY 2017, consistent with the same period in FY 2016.
  • Actions against delinquent filers markedly decreased in the first half of FY 2017 with only 35 actions filed, compared to 70 during the first half of FY 2016.

Regulatory Focus by Allegation Type

Using advanced textual analytics, Cornerstone Research’s proprietary model categorizes SEC enforcement actions by allegation type.

This model shows sizable increases in the number of cases against broker-dealers, issuer and reporting disclosure cases, and cases related to securities offerings in the first half of FY 2017. The number of cases involving delinquent filings, insider trading, and Foreign Corrupt Practices Act (FCPA) allegations decreased.

  • Broker-Dealer: Actions against broker-dealers increased 20 percent—comprising 25 percent of total enforcement activity in the first half of FY 2017 compared to 20 percent during FY 2016.
  • Issuer Reporting and Disclosure: Actions related to issuer reporting and disclosure jumped 34 percent. These actions made up 18 percent of total enforcement activity in the first half of FY 2017 compared to 12 percent during FY 2016.
  • Securities Offerings: Actions related to securities offerings rose 34 percent, representing 18 percent of total enforcement activity in the first half of FY 2017, up from 11 percent during FY 2016.
  • Insider Trading: There were 14 insider trading actions filed, down from 21 in the first half of FY 2016.
  • FCPA: There were seven FCPA actions, compared to 10 in the first half of FY 2016.

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