SEC Actions Against BDs Jump 20%: Cornerstone Research

First half of FY 2017 sees increase, as SEC continues to file vast majority of its actions as administrative proceedings rather than civil actions

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Enforcement actions levied against brokers by the Securities and Exchange Commission jumped 20% in the first half of 2017’s fiscal year, according to Cornerstone Research.

Actions related to issuer reporting and disclosure jumped 34% while actions involving securities offerings also increased by the same percent, according to Cornerstone’s proprietary research, SEC Enforcement Activity—First Half FY 2017 Update.

“In the face of uncertainty brought on by changes in SEC leadership and the new administration, enforcement activity continued last year’s heightened pace,” said David Marcus, senior vice president at Cornerstone Research, in a statement.

The SEC filed 334 total enforcement actions during the first half of FY 2017 (from Oct. 1, 2016–March 31, 2017), compared to 372 during the same period in the previous fiscal year.

Excluding actions against delinquent filers, the number of enforcement actions in the first half of FY 2017 was 299—virtually unchanged from the same period in the prior fiscal year.

The SEC continued to file the vast majority of its actions (80%) as administrative proceedings rather than civil actions, the research found.

Marcus noted that “despite critique and court challenges to the administrative proceeding forum, the Commission continued to file the vast majority” of its actions as administrative proceedings rather than civil actions.

The SEC filed 68 follow-on actions (administrative proceedings related to previously filed cases) during the first half of FY 2017, compared to 77 in the first half of FY 2016, the research found.

Follow-on actions comprised 20% of total enforcement activity in the first half of FY 2017, consistent with the same period last year.

Cases dropped involving Foreign Corrupt Practices Act allegations--seven were filed in actions the first half of 2017 compared to 10 in the first half of FY 2016.

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