Off-channel communications continues as an enforcement priority,
driving Broker Dealer allegations to 29% of FY 2024 actions.
NEW
YORK, Nov. 21, 2024 /PRNewswire-PRWeb/ -- The
U.S. Securities and Exchange Commission (SEC) initiated 80
enforcement actions against public companies and subsidiaries in
fiscal year 2024, marking a 12% decline from FY 2023 but still up
nearly 5% compared to the nine-year historical average, according
to a report released today by Cornerstone Research and the NYU
Pollack Center for Law & Business. Meanwhile, total monetary
settlements grew to $1.5 billion in
FY 2024, up from $1.3 billion the
previous year, although still below the $1.8
billion average observed between FY 2015 and FY 2023.
The report, SEC Enforcement Activity: Public Companies and
Subsidiaries—Fiscal Year 2024 Update, analyzes information from the
Securities Enforcement Empirical Database (SEED). This year's
report is available in a new, interactive format that enables
readers to better engage with the data.
The SEC's FY 2024 enforcement priorities were evident in the 38
actions that were part of five sweeps. Most prominent was the sweep
of recordkeeping failures stemming from companies' use of
off-channel communications (22 actions). This led to an increase in
actions with Broker Dealer allegations, with such actions jumping
to 29% of all FY 2024 actions compared with 19% during the previous
fiscal year. The SEC also brought seven actions for violations of
the whistleblower protection rule in FY 2024, up from three in FY
2023.
"The SEC's FY 2024 enforcement actions reveal a focus on trends
like off-channel communications and whistleblower protection," said
Stephen Choi, a report coauthor and
the Bernard Petrie Professor of Law and Business at New York University School of Law and Co-Director
of the NYU Pollack Center for Law & Business. "We also saw a
focus on cooperation and non-monetary settlements, as the agency
prioritized efficiency and cooperation in its enforcement
approach."
"SEC officials have emphasized that admissions of guilt are a
powerful accountability measure," added Sara Gilley, a report coauthor and cohead of the
Cornerstone Research securities litigation practice. "Former
Director of the SEC's Division of Enforcement Gurbir Grewal
indicated that the SEC brought more cases involving admissions of
guilt than in prior years to enhance accountability. Our report's
findings underscore these comments."
The average monetary settlement for defendants in FY 2024 was
$19.8 million—higher than the average
of $15 million in FY 2023 but lower
than the FY 2015–FY 2023 average of $24.7
million. Cooperation was up in FY 2024, with 75% of public
company and subsidiary defendants in settled actions having
cooperation noted by the SEC, and a record 34 had admissions of
guilt. The 75% included 5% who had cooperation noted but did not
pay a monetary settlement.
Additional Highlights
- While the average monetary settlement was higher than in FY
2023, the median monetary settlement was lower at $3.2 million in FY 2024 compared to $4.0 million in FY 2023.
- The percentage of public company and subsidiary defendants for
which the SEC noted cooperation was at its highest level (75%)
since FY 2019 (77%) and the second highest in SEED. The average
from FY 2015 through FY 2023 was 64%.
- The SEC imposed $784 million in
civil penalties in administrative proceedings in FY 2024,
accounting for 54% of total monetary settlements. The $784 million was higher than the FY 2023 total of
$694 million in civil penalties
imposed.
- In FY 2024, the percentage of total monetary settlements from
disgorgement and prejudgment interest in civil actions was 15%, the
highest percentage since FY 2020.
- Public company and subsidiary defendants with admissions of
guilt under the current Gensler administration totaled 66, more
than double the number under Chair White (29) and more than seven
times those under Chair Clayton (9).
About Cornerstone Research
Cornerstone Research provides economic and financial consulting and
expert testimony in all phases of complex disputes and regulatory
investigations. The firm works with an extensive network of
prominent academics and industry practitioners to identify the
best-qualified expert for each assignment. With a reputation for
high quality and effectiveness, Cornerstone Research has
consistently delivered rigorous, state-of-the-art analysis since
1989. The firm has more than 1,000 professionals in nine offices
across the United States, UK, and
EU.
About the Securities Enforcement Empirical Database
The Securities Enforcement Empirical Database (SEED) tracks and
records information for SEC enforcement actions filed against
public companies traded on major U.S. exchanges and their
subsidiaries. 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. The variables tracked include
defendant names and types, violations, venues, and resolutions.
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.
Media Contact
Elisabeth Gaubinger, Cornerstone
Research, 202.912.8909,
egaubinger@cornerstone.com, https://www.cornerstone.com/
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SOURCE Cornerstone Research