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. Actions against public company–related defendants continued an upward trajectory in FY 2016 after a dramatic increase in FY 2015.
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 and related subsidiary defendants in most years, a trend that has continued in FY 2016. FCPA allegations made up the largest percentage in FY 2011 and Municipal Securities/Public Pensions allegations were the largest percentage in FY 2015.
For many of its enforcement actions, the SEC is able to choose whether to file the action in federal court or as an administrative proceeding before an SEC administrative law judge. One of the important provisions of the Dodd-Frank Act of 2010 was to give the SEC enhanced powers to impose civil penalties in SEC administrative proceedings. The share of enforcement proceedings filed by the SEC as administrative proceedings compared to those filed as civil actions did not immediately shift after Dodd-Frank. Instead, the percentage of administrative proceedings took a dramatic turn upwards in FY 2014. The SEC continued to use its administrative proceeding forum for the vast majority of actions through FY 2016.
Historically, actions that are resolved on the same day they were initiated (concurrent settlements) are more common in administrative proceedings than civil actions. Consistent with the SEC’s increased use of administrative proceedings, the percentage of actions with concurrent settlements has increased over time. In FY 2016, 97 percent of public company–related defendants resolved SEC actions on the same day they were initiated. This was an increase from 94 percent in FY 2015 and the FY 2010–FY 2015 median of 87 percent.
The top ten monetary settlements in public company–related actions ranged from $200 million to $550 million. Four of these occurred in administrative proceedings, while six were in civil actions. The largest monetary SEC settlement since FY 2010 was $550 million by a subsidiary of a public financial services company and the next largest monetary settlement was $525 million by a public oil and gas company in FY 2013.
Public company-related defendants cooperated in 55 percent of settlements with the SEC in FY 2016. The SEC noted cooperation more frequently in administrative proceedings than civil actions, a disparity that has increased noticeably over the last three FYs.