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Regulation

SEC enforcement actions surge in second half of fiscal 2018

Regulators at the Securities and Exchange Commission took far more enforcement actions against public companies and subsidiaries in the second half of fiscal year 2018, according to a report issued Tuesday by the New York University Pollack Center for Law & Business and Cornerstone Research.

In analyzing data from the Securities Enforcement Empirical Database, the report showed that the SEC filed 55 new actions against public companies and subsidiaries in the second half of fiscal year 2018, which ended Sept. 30. For the entire fiscal year, the SEC filed 71 new enforcement actions against public companies and subsidiaries, compared to 65 the previous year. SEC enforcement actions peaked in the category in fiscal years 2015 and 2016 when there were an average of 86 new actions, according to the report.

Stephen Choi, the Murray and Kathleen Bring professor of law at the NYU School of Law and director of the Pollack Center for Law & Business, in a news release called the uptick in enforcement actions a "dramatic comeback" for the SEC. "While we often see end-of-year upticks, the number of actions filed in the second half of fiscal year 2018 was more than triple the number filed in the first half of the year," he said.

In the report, Mr. Choi noted that 23 of the year's 77 enforcement actions were taken in September, the last month of the fiscal year.

Monetary settlements in public company and subsidiary actions totaled more than $2.4 billion in the fiscal year, which was more than the total in any fiscal year since at least 2010, and an 87% increase from the previous year, according to the report.

Of the actions against public companies and subsidiaries in fiscal year 2018, 85% were brought as administrative proceedings, while 55% of actions without public companies or subsidiaries were filed as civil actions, according to the report.

For the fourth fiscal year in a row, more than half of public company and subsidiary settlements noted some form of cooperation. In 2018, it was 61%, the report noted.

Moreover, the SEC imposed monetary penalties in 89% of its fiscal year 2018 settlements with public companies and subsidiaries. This percentage is consistent with the 84% average seen over fiscal years 2010-17, the report stated.

The report is available on the Cornerstone website.