The number of cases the SEC filed against publicly traded companies hit at least a decade-high this year, according to findings from New York University and Cornerstone Research that analyzed the SEC’s annual report. Total cases initiated by the SEC — against public companies or not — jumped to the highest level since 2016.
Why it matters: Over 50 of the enforcement actions on public company and subsidiaries targeted investment advisers or brokers — a nod to SEC chairman Jay Clayton’s emphasis on protecting the retail investor.
Between the lines: The jump is explained by the agency’s initiative that encouraged financial firms to self-report instances where advisers sold certain fee-paying mutual funds to clients over other funds.
- In return for self-reporting, those companies will pay a small fee and don’t have to admit wrongdoing.
- This accounted for actions against 95 companies in total, 26 of them public.
By the numbers: The SEC settled with Mylan, KPMG and Fiat Chrysler this year, among others. The highest dollar figure settlement this year against a publicly traded company came to $147 million.
- That’s the lowest maximum penalty for a public company in the report’s 10-year history.
- 72% of public companies that faced enforcement action settled by paying a fine and cooperating with the SEC.
- 20% paid a fine but didn’t cooperate.
The bottom line: For all enforcement activity, including cases brought against individuals, the SEC took in $4.3 billion in fines and disgorgements (or the return of profits gained illegally), though a single case against a privately held real estate investing firm accounted for $1 billion of that amount.
- That’s up from $3.9 billion in penalties for 2018.
P.S. Enforcement activity by the Commodity Futures Trading Commission slowed to 63 from last year’s 83 cases, the agency said on Monday.
- The derivatives regulator collected $1.3 billion in penalties and payments — a 40% jump year-over-year and the fourth highest in CFTC history.
