SEC enforcement activity against public company and subsidiary defendants increased in FY 2022 to 68 actions. The first full fiscal year of Chair Gensler’s tenure also saw total monetary settlements imposed by the SEC in public company and subsidiary actions climb to $2.8 billion. Monetary settlements were imposed on 97% of settling defendants. Both the total dollar amount and the percentage were the largest of any fiscal year in SEED.

Findings on public company and subsidiary defendants are based on data from the Securities Enforcement Empirical Database (SEED), a collaboration between the NYU Pollack Center for Law & Business and Cornerstone Research. SEED data cover FY 2010 through the present. Public companies are defined as those that traded on a major U.S. exchange as identified by the Center for Research in Security Prices (CRSP) at the time the enforcement action was initiated or within the five-year period preceding the initiation.

Filings

• The SEC filed 68 actions against public companies and their subsidiaries in FY 2022, an increase of 28% from FY 2021. (page 3)

• The 28% increase in actions in Chair Gensler’s first full fiscal year was higher than the 12% increase in the first fiscal year under Chair Clayton in FY 2018, but lower than the 38% increase in the first fiscal year under Chair White in FY 2014. (page  3)

Allegations

• Issuer Reporting and Disclosure continued to be the most common allegation type in FY 2022, accounting for 38% of actions. (page 4)

• For the first time since FY 2018, Broker Dealer allegations were the second most common in SEED. (page 4)

Enforcement Venue

• Despite ongoing challenges to the constitutionality of the SEC’s use of administrative law judges (ALJs), the SEC continued to bring the majority of actions (88%) as administrative proceedings in FY 2022. (page 5)

• Five actions against public companies and subsidiaries were litigated in FY 2022, more than the average of three over the prior five fiscal years. (page 5)

Settlements

• Of the 75 public company and subsidiary defendants that settled during FY 2022, 97% involved a monetary component, the highest percentage of any fiscal year in SEED. (page  6)

• Monetary settlements imposed in public company or subsidiary actions in FY 2022 reached $2.8 billion, $0.9 billion more than in FY 2021. (page 7)

• In FY 2022, 82% of total monetary settlements came from civil penalties and other penalties, the highest percentage in SEED. (page 8)

• Sixteen defendants had admissions of guilt in FY 2022, double the highest number in any prior fiscal year in SEED. (page  9)

Click here to read the full report from Cornerstone Research.