Stand-Alone Suits Fueling Spike in SEC Enforcement Cases

Securities Law Daily provides daily coverage of developments in the regulation of federal, state, and international securities and futures trading, with objective coverage of the...

By Phyllis Diamond

Jan. 13 — The number of new Securities and Exchange Commission enforcement cases rose from 681 to 807 in a five-year period, fueled largely by a record number of independent actions—i.e., lawsuits that weren't follow-on administrative proceedings or delinquent filings—a Cornerstone Research report said.

The report—SEC Enforcement Activity Against Public Company Defendants—said that in contrast, the percentage of follow-on administrative proceedings fell between fiscal years 2013 and 2015. The number and percentage of actions against public issuers has remained relatively constant, the report said.

Disclosure, FCPA Violations

In other findings, Cornerstone reported that 85 percent of the SEC's cases against public company defendants in 2015 alleged either reporting and disclosure or Foreign Corrupt Practices Act violations. In fiscal 2015, more than 80 percent of issuer defendants settled at the same time the action was filed. According to the report, same-time settlements in civil lawsuits actions dropped substantially while concurrent settlements in administrative proceedings increased.

Since 2010, most of the large penalties and disgorgement orders imposed on public company defendants occurred in administrative proceedings, the report said.

To contact the reporter on this story: Phyllis Diamond in Washington at pdiamond@bna.com

To contact the editor responsible for this story: Susan Jenkins at sjenkins@bna.com