iAll Independent SEC Actions
The SEC reports the annual number of enforcement actions filed as independent (stand-alone) actions, follow-on administrative proceedings, and delinquent filing actions.[i] The defendants in these actions include public companies, subsidiaries of public companies, individuals, and other (non-public) entities.
The SEC initiated a total of 405 independent actions in FY 2020. This was the lowest total since FY 2013. However, the SEC imposed a record-setting $4.68 billion in monetary settlements.[ii]
The SEC described FY 2020 as “another successful year for the Division of Enforcement, despite the unprecedented challenges posed by the global COVID‑19 pandemic.”[iii]
Six of the independent actions pertained to COVID-19.
These six COVID-19 actions involved allegations of pump-and-dump schemes as well as false claims and misleading statements related to COVID-19 tests and personal protective equipment (PPE).[iv]
SEED covers independent actions that are filed against public companies or subsidiaries of public companies. Collectively these defendants are referred to as public companies and subsidiaries. See Research Sample.
Actions against public companies and subsidiaries accounted for 15 percent of the 405 independent actions, the same percentage as the FY 2013–FY 2019 average.
134: Total number of independent actions filed in 1H FY 2020, the lowest in any half year since at least 1H FY 2015.
Figure 2: All Independent SEC Actions FY 2013–FY 2020
Source: Securities Enforcement Empirical Database (SEED); SEC Data (“Select SEC and Market Data Fiscal 2013,” “Select SEC and Market Data Fiscal 2014,” “Select SEC and Market Data Fiscal 2015,” “Select SEC and Market Data Fiscal 2016,” “Division of Enforcement Annual Report: A Look Back at Fiscal Year 2017,” “Division of Enforcement Annual Report 2018,” “Division of Enforcement Annual Report 2019,” and “Division of Enforcement Annual Report 2020.”) Note: Relief defendants are not considered.
Public Company and Subsidiary SEC Actions
The remainder of this report focuses on actions against public companies and subsidiaries based on data from SEED unless noted otherwise.
The SEC filed 61 public company and subsidiary actions in FY 2020, the lowest number since FY 2014. The 61 actions were a 36 percent decrease from the record high of 95 actions in FY 2019 that included 26 actions related to the Share Class Initiative.
Excluding actions related to the Share Class Initiative in FY 2019, the number of actions filed in FY 2020 was closer, albeit still below, the FY 2017–FY 2019 average of 69 actions.
Over twice as many actions were filed in the second half of FY 2020 than the first half (41 vs. 20 actions). The second half’s share of the total number of actions in FY 2020 (67 percent) was high compared to 45 percent in the second half of FY 2019.
- Consistent with past years, the SEC filed a large number of actions at the end of its fiscal year, including 18 actions filed in the last two weeks of FY 2020.
- The actions filed at the end of FY 2020 included the first two actions brought under the SEC’s new EPS Initiative. The EPS Initiative “utilizes risk-based data analytics to uncover potential accounting and disclosure violations caused by, among other things, earnings management practices.”[v]
31%: Percentage of FY 2020 public company and subsidiary actions filed in September
Figure 3: Public Company and Subsidiary Actions FY 2010–FY 2020
Source: Securities Enforcement Empirical Database (SEED) Note: Relief defendants are not considered.
Read the report, SEC Enforcement Activity: Public Companies and Subsidiaries—Fiscal Year 2020 Update.
Read Executive Summary: SEC Enforcement Activity: Public Companies and Subsidiaries
Read Key Trends: SEC Enforcement Activity: Public Companies and Subsidiaries—Fiscal Year 2020 Update
[i] See, e.g., “Division of Enforcement Annual Report 2020,” U.S. Securities and Exchange Commission, November 2, 2020, p. 16, https://www.sec.gov/files/enforcement-annual-report-2020.pdf.
[ii] See “Division of Enforcement Annual Report 2020,” U.S. Securities and Exchange Commission, November 2, 2020, p. 7, https://www.sec.gov/files/enforcement-annual-report-2020.pdf.
[iii] “Division of Enforcement Annual Report 2020,” U.S. Securities and Exchange Commission, November 2, 2020, p. 16, https://www.sec.gov/files/enforcement-annual-report-2020.pdf.
[iv] “Division of Enforcement Annual Report 2020,” U.S. Securities and Exchange Commission, November 2, 2020, pp. 25–26, https://www.sec.gov/files/enforcement-annual-report-2020.pdf.
[v] U.S. Securities and Exchange Commission, “SEC Charges Companies, Former Executives as Part of Risk-Based Initiative,” September 28, 2020, https://www.sec.gov/news/press-release/2020-226.
