SEC Activity Against Public Companies Remains High in 2017

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By Antoinette Gartrell

Public companies or their subsidiaries were sued by the Securities and Exchange Commission in the first half of fiscal year 2017 just as often as in previous years, although that could change under President Donald Trump.

The commission has brought 44 such actions in fiscal 2017 so far—roughly as many as it brought during the same period a year ago, according to a NYU Pollack Center for Law & Business and Cornerstone Research report released May 9.

The statistics came as no surprise to former enforcement lawyer Stephen Crimmins of Murphy & McGonigle, New York and Washington. “This confirms what we’ve been experiencing,” Crimmins, who represents clients before financial services regulators, told Bloomberg BNA. The SEC’s enforcement team has not slowed down during the transition to new leadership and case production remains high, he said.

Washington securities lawyer Robert Plotkin of McGuireWoods LLP, however, said the figures only include two months of the Trump administration and may not reflect the priorities of new appointees.

“Based on many campaign and later comments, it is likely that the number of cases may be reduced and the type of entities sued may change from public companies to smaller entities and/or individuals,” Plotkin said. He also said it will be interesting to see what cases are brought against large financial institutions, which saw many enforcement actions during the Obama administration.

The report also revealed that 91 percent of the actions against public company-related defendants came before the agency’s much-criticized in-house administrative forum. Most of the public companies sued so far in fiscal 2017 were in the manufacturing industry, accounting for 40 percent of actions, the report said.

Finance, insurance and real estate companies or their subsidiaries also were named in a number of SEC enforcement actions.

Most Frequent Issue

Issuer reporting and disclosure violations remained the most frequent allegation, present in 45 percent of public company-related actions, the report said. These cases are basic to the agency’s enforcement program and continue to lead its docket, Crimmins said.

In terms of penalties, the SEC’s largest monetary settlement came in an investment management case, and over 40 percent of the penalties ordered came from six Foreign Corrupt Practices Act settlements. “Investment management and FCPA cases remain on the front burner,” Crimmins said.

The report also highlighted that 63 percent of public company-related defendants cooperated with the commission.

The report analyzes data for fiscal years 2016 through the first half of 2017 in a public online NYU and Cornerstone database that provides data on SEC actions against defendants that are public companies traded on major U.S. exchanges and their subsidiaries.

To contact the reporter on this story: Antoinette Gartrell in Washington at

To contact the editor responsible for this story: Phyllis Diamond at

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