TheCorporateCounsel.net

Dave blogged last week about the SEC’s surprising FY24 Enforcement results. The SEC’s lengthy press release is organized by topic and is worth a read for whichever category (or categories) of Enforcement priorities might be most likely to affect your company.

This report from Cornerstone Research and the NYU Pollack Center for Law & Business also spotlights some interesting trends. As noted in their press release, some key Enforcement sweeps contributed to the results:

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.

Here are some other key takeaways from the report:

– 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).

Even though SEC Enforcement Director Gurbir Grewal left the SEC in early October, shortly after the agency’s fiscal year end, we are continuing to see activity. Cooley’s Cydney Posner has covered a few newer Enforcement actions that were announced in recent weeks. The allegations related to:

– Goodwill impairment charges,

– Channel stuffing, and

– Material omissions about FDA developments

– Liz Dunshee