Press Releases
SEC Administrative Proceedings Increase as Constitutional Challenges Continue
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In fiscal year 2015, concurrent settlements with public company defendants increased for SEC administrative proceedings but decreased for civil actions. --Stephen Choi
New report draws on recently launched Securities Enforcement Empirical Database (SEED)
A report issued jointly by the NYU Pollack Center for Law & Business and Cornerstone Research reveals that the U.S. Securities and Exchange Commission (SEC) filed 76 percent of its enforcement actions against public company defendants as administrative proceedings in fiscal year (FY) 2015. At the same time, constitutional challenges to these in-house actions continued to gain momentum. Both the number and percentage of SEC actions filed as administrative proceedings against public company defendants have more than tripled since FY 2010.
The report, SEC Enforcement Activity against Public Company Defendants: Fiscal Years 2010–2015, draws on data from the Securities Enforcement Empirical Database (SEED), a collaboration between the NYU Pollack Center and Cornerstone Research that tracks and records information on SEC enforcement actions filed against public company defendants.
Overall Increase in Enforcements
The SEC initiated a record 807 enforcement actions in FY 2015, up from 755 in FY 2014. Fiscal year 2015 represented a 7 percent increase compared to the preceding record-breaking fiscal year of 2014, and was 10 percent above the median for FY 2010 through FY 2015.
Concurrent Settlements
In FY 2015, more than 80 percent of public company defendants resolved SEC enforcement actions on the same day they were initiated (concurrent settlements). In SEC actions brought as administrative proceedings, public company defendants settled 96 percent concurrently. For Commission enforcements filed as civil actions, public company defendants settled only 38 percent concurrently.
“In fiscal year 2015, concurrent settlements with public company defendants increased for SEC administrative proceedings but decreased for civil actions,” commented Professor Stephen Choi, the Murray and Kathleen Bring Professor of Law at the NYU School of Law and Director of the Pollack Center for Law & Business. “The recent disparity in concurrent settlements between different enforcement venues appears to be driven by the Commission’s expanded use of administrative proceedings.”
Allegations
Alleged violations of either Issuer Reporting and Disclosure provisions of the securities laws or the Foreign Corrupt Practices Act (FCPA) accounted for 85 percent of the SEC actions filed against public company defendants in FY 2015.
“After the SEC announced a new initiative aimed at preventing and detecting improper financial reporting, the majority of cases against public company defendants in recent years have focused on these concerns,” said Dr. David Marcus, a Senior Vice President of Cornerstone Research.
Monetary Penalties and Disgorgements
During FY 2010 through FY 2015, the SEC imposed $3.7 billion in monetary penalties and disgorgements on public company defendants. Public company defendants paid a larger share of penalties and disgorgements relative to their share of the total number of SEC enforcement actions filed during this period. From FY 2013 through FY 2015, the majority of the largest penalties and disgorgements were imposed in actions the SEC brought as administrative proceedings.
Additional findings on SEC enforcement actions against public company defendants are available in the report.
About the Securities Enforcement Empirical Database (SEED)
The Securities Enforcement Empirical Database (SEED) tracks and records information for SEC enforcement actions filed against public company defendants. Created by the NYU Pollack Center for Law & Business in cooperation with Cornerstone Research, SEED facilitates the analysis and reporting of SEC enforcement actions through regular updates of new filings and settlement information for ongoing enforcement actions. A portion of the Securities Enforcement Empirical Database (SEED) is available to the general public, and a more extensive version is available for academic scholars.
About the NYU Pollack Center for Law & Business
Established in 1997, the NYU Pollack Center for Law & Business is a joint venture of the NYU School of Law and the Stern School of Business. Its mission is to enrich the teaching curriculum at both schools in areas where law and business intersect; to facilitate professional interaction and academic research by faculty who share an interest in the structure, regulation, and function of the market economy; and to contribute to the public welfare by supporting scholarship that assists governmental and private policymakers in their pursuit of enhanced business productivity.
About Cornerstone Research
Cornerstone Research provides economic and financial consulting and expert testimony in all phases of complex litigation and regulatory proceedings. The firm works with an extensive network of prominent faculty and industry practitioners to identify the best-qualified expert for each assignment. Cornerstone Research has earned a reputation for consistent high quality and effectiveness by delivering rigorous, state-of-the-art analysis for over 25 years. The firm has 600 staff and offices in Boston, Chicago, London, Los Angeles, Menlo Park, New York, San Francisco, and Washington.
The report, SEC Enforcement Activity against Public Company Defendants: Fiscal Years 2010–2015, draws on data from the Securities Enforcement Empirical Database (SEED), a collaboration between the NYU Pollack Center and Cornerstone Research that tracks and records information on SEC enforcement actions filed against public company defendants.
Overall Increase in Enforcements
The SEC initiated a record 807 enforcement actions in FY 2015, up from 755 in FY 2014. Fiscal year 2015 represented a 7 percent increase compared to the preceding record-breaking fiscal year of 2014, and was 10 percent above the median for FY 2010 through FY 2015.
Concurrent Settlements
In FY 2015, more than 80 percent of public company defendants resolved SEC enforcement actions on the same day they were initiated (concurrent settlements). In SEC actions brought as administrative proceedings, public company defendants settled 96 percent concurrently. For Commission enforcements filed as civil actions, public company defendants settled only 38 percent concurrently.
“In fiscal year 2015, concurrent settlements with public company defendants increased for SEC administrative proceedings but decreased for civil actions,” commented Professor Stephen Choi, the Murray and Kathleen Bring Professor of Law at the NYU School of Law and Director of the Pollack Center for Law & Business. “The recent disparity in concurrent settlements between different enforcement venues appears to be driven by the Commission’s expanded use of administrative proceedings.”
Allegations
Alleged violations of either Issuer Reporting and Disclosure provisions of the securities laws or the Foreign Corrupt Practices Act (FCPA) accounted for 85 percent of the SEC actions filed against public company defendants in FY 2015.
“After the SEC announced a new initiative aimed at preventing and detecting improper financial reporting, the majority of cases against public company defendants in recent years have focused on these concerns,” said Dr. David Marcus, a Senior Vice President of Cornerstone Research.
Monetary Penalties and Disgorgements
During FY 2010 through FY 2015, the SEC imposed $3.7 billion in monetary penalties and disgorgements on public company defendants. Public company defendants paid a larger share of penalties and disgorgements relative to their share of the total number of SEC enforcement actions filed during this period. From FY 2013 through FY 2015, the majority of the largest penalties and disgorgements were imposed in actions the SEC brought as administrative proceedings.
Additional findings on SEC enforcement actions against public company defendants are available in the report.
About the Securities Enforcement Empirical Database (SEED)
The Securities Enforcement Empirical Database (SEED) tracks and records information for SEC enforcement actions filed against public company defendants. Created by the NYU Pollack Center for Law & Business in cooperation with Cornerstone Research, SEED facilitates the analysis and reporting of SEC enforcement actions through regular updates of new filings and settlement information for ongoing enforcement actions. A portion of the Securities Enforcement Empirical Database (SEED) is available to the general public, and a more extensive version is available for academic scholars.
About the NYU Pollack Center for Law & Business
Established in 1997, the NYU Pollack Center for Law & Business is a joint venture of the NYU School of Law and the Stern School of Business. Its mission is to enrich the teaching curriculum at both schools in areas where law and business intersect; to facilitate professional interaction and academic research by faculty who share an interest in the structure, regulation, and function of the market economy; and to contribute to the public welfare by supporting scholarship that assists governmental and private policymakers in their pursuit of enhanced business productivity.
About Cornerstone Research
Cornerstone Research provides economic and financial consulting and expert testimony in all phases of complex litigation and regulatory proceedings. The firm works with an extensive network of prominent faculty and industry practitioners to identify the best-qualified expert for each assignment. Cornerstone Research has earned a reputation for consistent high quality and effectiveness by delivering rigorous, state-of-the-art analysis for over 25 years. The firm has 600 staff and offices in Boston, Chicago, London, Los Angeles, Menlo Park, New York, San Francisco, and Washington.