November 23, 2021

SEC Enforcement: Actions Against Public Companies Decline in FY 2021

According to Cornerstone Research’s recent report on SEC enforcement activity, the number of actions against public companies declined during fiscal 2021. That marks the second year in a row that the number enforcement actions targeting public companies declined. Here are some of the highlights:

– The SEC filing 53 enforcement proceedings against public companies or their subsidiaries in fiscal 2021, nine fewer than in fiscal 2020 and the lowest level since fiscal 2014. The number of fiscal 2021 filings was 32% lower than the average over the past five fiscal years.

– Reporting and disclosure violations were the primary allegations in 51% of the cases filed during fiscal 2021. FCPA actions accounted for only 8% of the cases – the lowest level on record.

– The SEC noted cooperation in 58% of public company settlements in 2021, which is consistent with prior year averages. The median monetary settlement was $1 million, significantly below the $4 million median average for fiscal years 2012-2020.

– The number of settlements requiring admissions has declined from five in fiscal 2019 to two in fiscal 2020 and bottomed out at zero in fiscal 2021.

In evaluating the report’s conclusions, it’s worth noting – as the report points out – that a decline in enforcement actions against public companies is consistent with trends seen in prior years when there was a transition in SEC Chairs.

John Jenkins