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Cornerstone Research Finds SEC Actions Against Broker-Dealers Up 20 Percent

Cornerstone Research, an economic and financial consulting firm, released a new research report where it found an increase in SEC enforcement actions involving broker-dealers, issuer reporting and disclosure, and securities offerings through the first half of fiscal year 2017.

According to SEC Enforcement Activity—First Half FY 2017 Update, actions against broker-dealers increased 20 percent; actions related to issuer reporting and disclosure jumped 34 percent, and actions involving securities offerings rose 34 percent.

These increases were accompanied by a 50 percent decline in actions against delinquent filers—only 35 were filed during the first half of FY 2017, compared to 70 in the first half of the previous fiscal year. Actions involving allegations of insider trading and Foreign Corrupt Practices Act violations also decreased, the firm noted.

In the first half of 2017, the SEC filed 334 enforcement actions, down from 372 filings during the same period in FY 2016. The company found that most of the decline can be attributed to a decrease in actions against delinquent filers, however, excluding those actions, there were 299 actions in the first half of FY 2017—virtually unchanged from the same period last fiscal year.

“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 Dr. David Marcus, senior vice president at Cornerstone Research. “In addition, despite critique and court challenges to the administrative proceeding forum, the Commission continued to file the vast majority of its actions—80 percent—as administrative proceedings rather than civil actions.”

Cornerstone Research provides economic and financial consulting and expert testimony in all phases of litigation and regulatory proceedings. The firm has 700 staff and offices in Boston, Chicago, London, Los Angeles, New York, San Francisco, Silicon Valley, and Washington.

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