Off-channel communications continues as an enforcement priority, driving Broker Dealer allegations to 29% of FY 2024 actions.

NEW YORK, Nov. 21, 2024 /PRNewswire-PRWeb/ -- The U.S. Securities and Exchange Commission (SEC) initiated 80 enforcement actions against public companies and subsidiaries in fiscal year 2024, marking a 12% decline from FY 2023 but still up nearly 5% compared to the nine-year historical average, according to a report released today by Cornerstone Research and the NYU Pollack Center for Law & Business. Meanwhile, total monetary settlements grew to $1.5 billion in FY 2024, up from $1.3 billion the previous year, although still below the $1.8 billion average observed between FY 2015 and FY 2023.

The report, SEC Enforcement Activity: Public Companies and Subsidiaries—Fiscal Year 2024 Update, analyzes information from the Securities Enforcement Empirical Database (SEED). This year's report is available in a new, interactive format that enables readers to better engage with the data.

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.

"The SEC's FY 2024 enforcement actions reveal a focus on trends like off-channel communications and whistleblower protection," said Stephen Choi, a report coauthor and the Bernard Petrie Professor of Law and Business at New York University School of Law and Co-Director of the NYU Pollack Center for Law & Business. "We also saw a focus on cooperation and non-monetary settlements, as the agency prioritized efficiency and cooperation in its enforcement approach."

"SEC officials have emphasized that admissions of guilt are a powerful accountability measure," added Sara Gilley, a report coauthor and cohead of the Cornerstone Research securities litigation practice. "Former Director of the SEC's Division of Enforcement Gurbir Grewal indicated that the SEC brought more cases involving admissions of guilt than in prior years to enhance accountability. Our report's findings underscore these comments."

The average monetary settlement for defendants in FY 2024 was $19.8 million—higher than the average of $15 million in FY 2023 but lower than the FY 2015–FY 2023 average of $24.7 million. Cooperation was up in FY 2024, with 75% of public company and subsidiary defendants in settled actions having cooperation noted by the SEC, and a record 34 had admissions of guilt. The 75% included 5% who had cooperation noted but did not pay a monetary settlement.

Additional Highlights

• 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).

About Cornerstone Research
Cornerstone Research provides economic and financial consulting and expert testimony in all phases of complex disputes and regulatory investigations. The firm works with an extensive network of prominent academics and industry practitioners to identify the best-qualified expert for each assignment. With a reputation for high quality and effectiveness, Cornerstone Research has consistently delivered rigorous, state-of-the-art analysis since 1989. The firm has more than 1,000 professionals in nine offices across the United States, UK, and EU.

About the Securities Enforcement Empirical Database
The Securities Enforcement Empirical Database (SEED) tracks and records information for SEC enforcement actions filed against public companies traded on major U.S. exchanges and their subsidiaries. Created by the NYU Pollack Center for Law & Business in cooperation with Cornerstone Research, SEED facilitates the analysis and reporting of SEC enforcement actions through regular updates of new filings and settlement information for ongoing enforcement actions. The variables tracked include defendant names and types, violations, venues, and resolutions.

About the NYU Pollack Center for Law & Business
Established in 1997, the NYU Pollack Center for Law & Business is a joint venture of the NYU School of Law and the Stern School of Business. Its mission is to enrich the teaching curriculum at both schools in areas where law and business intersect; to facilitate professional interaction and academic research by faculty who share an interest in the structure, regulation, and function of the market economy; and to contribute to the public welfare by supporting scholarship that assists governmental and private policymakers in their pursuit of enhanced business productivity.

Media Contact

Elisabeth Gaubinger, Cornerstone Research, 202.912.8909, egaubinger@cornerstone.com, https://www.cornerstone.com/ 

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SOURCE Cornerstone Research