Recent Trends in SEC Penalties Against Public Companies

Over the past 20 years, civil penalties have become an increasingly important part of the SEC’s enforcement program.  The agency frequently imposes large monetary penalties, highlights those penalties in press releases, and touts them in end-of-year statistics.  Civil penalties are justified as a necessary deterrent to unlawful conduct and a powerful tool for promoting ethical and legal behavior.  But with respect to one category of cases – those involving public companies – civil penalties have always been controversial, because the cost of the penalty is ultimately borne by the shareholders who had nothing to do with the misconduct and indeed … Read more

Admissions in SEC Enforcement Cases: The Revolution that Wasn’t

In 2013, the Securities and Exchange Commission announced a new policy of sometimes requiring admissions when settling enforcement actions.  The policy was a radical departure from the agency’s more than four decades-old practice of allowing companies and individuals to settle cases without admitting or denying the allegations against them. The change came in the wake of the financial crisis of 2008 and in response to widespread criticism that the agency was being too soft on wrongdoers, allowing them to resolve matters without taking responsibility for their actions.  Since the new policy went into effect, the SEC has repeatedly trumpeted its … Read more