The Securities Enforcement Empirical Database (SEED) currently provides data for SEC actions initiated against public companies traded on major U.S. exchanges and their subsidiaries (public company–related defendants). We define public companies as companies with security prices that are tracked by the Center for Research in Security Prices. The number of new actions against public company–related defendants decreased by 33 percent in FY 2017. While the number of actions in the first half of FY 2017 was on pace to match the past two fiscal years, the number of actions declined by 62 percent in the second half.
SEED tracks the type of allegation the SEC makes in each enforcement proceeding. Issuer Reporting and Disclosure allegations make up the largest fraction of the SEC’s enforcement activity against public company–related defendants in most years, a trend that has continued in FY 2017. Similar to FY 2016, Investment Advisor/Investment Companies allegations were the second most frequent allegation type in FY 2017. FCPA allegations were the third most frequent with 10 actions in total, but only two of them were filed since February 2017.
SEED tracks the Standard Industrial Classification (SIC) codes of public company defendants and the publicly traded parent companies of subsidiary defendants. Finance, Insurance, and Real Estate was the most common industry in FY 2017 with 42 percent of actions against public company–related defendants. Manufacturing was the second most common industry in FY 2017 with 32 percent of actions, almost double of its share in FY 2016.
Finance, Insurance, and Real Estate defendants dominated every major allegation type except FCPA and Issuer Reporting and Disclosure. Manufacturing defendants faced the majority of FCPA (64 percent) allegations.
In FY 2017, 98 percent of public company–related defendants resolved SEC actions on the same day they were initiated (concurrent resolutions). From FY 2010 through FY 2017, only 32 actions (out of 462 actions) had non-concurrent resolutions, and six actions were unresolved as of the end of FY 2017. The majority of non-concurrent resolutions involved Issuer Reporting and Disclosure allegations.
Public company-related defendants cooperated in 54 percent of settlements with the SEC in FY 2017, a decline from FY 2015 (71 percent) and FY 2016 (64 percent). Within FY 2017, the percentage of cooperating defendants declined from 63 percent in the first half to 32 percent in the second half. The second-half percentage is the lowest since the first half of FY 2013, when 18 percent of defendants cooperated with the SEC.
The 58 public company–related actions resolved in FY 2017 resulted in total monetary settlements of $1.2 billion. Between the first and second halves of FY 2017, total monetary settlements declined from $1.0 billion to $196 million. Similarly, the percentage of resolved actions with monetary penalties dropped from 94 percent to 78 percent.
From FY 2010 through FY 2017, the top ten monetary settlements imposed in public company–related actions totaled over $3.4 billion. Seven of these involved financial institutions. The largest monetary settlement in FY 2017 was $236 million by a public pharmaceutical company and involved FCPA violations.