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Regulation

SEC enforcement actions, fines drop precipitously following Jay Clayton’s appointment

U.S. securities regulators took fewer enforcement actions and imposed fewer fines since Securities and Exchange Commission Chairman Jay Clayton took over, according to a report issued Tuesday by the New York University Pollack Center for Law & Business and Cornerstone Research.

At the same time, actions against companies in finance, insurance and real estate reached a record 42% of actions in the 2017 fiscal year, which ended Sept. 30, including an increase in actions against investment advisory firms and investment companies, consistent with Mr. Clayton's pledge to focus on protecting retail investors.

The report found that SEC enforcement officials filed 33% fewer enforcement actions against public companies and their subsidiaries in fiscal year 2017, with 62 new actions compared to 92 actions in the previous fiscal year.

Settlements declined to $196 million in the second half of the fiscal year from $1 billion in the first half.

Mr. Clayton was confirmed on May 2, two months after the midpoint of the fiscal year. There were only 17 actions taken in the second half of the year, compared to 45 in the first half, according to the report based on the Securities Enforcement Empirical Database maintained by the Pollack Center and Cornerstone.

"The data from SEED show a substantial decline in public company–related enforcement actions, the timing of which corresponds with SEC leadership changes in the new administration," said Stephen Choi, director of the Pollack Center for Law & Business, in a statement.

The percentage of companies cooperating with SEC enforcement officials also declined in the second half of the fiscal year, to 32% from 63%.

Reporting and disclosure were the most common type of action taken in fiscal 2017, accounting for 39% of actions against public companies.

The report is available on the Cornerstone website.