The Securities and Exchange Commission handed out increased total financial penalties to public companies and their subsidiaries in fiscal year 2024.
A new analysis shows that $1.5 billion in monetary settlements were agreed in the year compared to $1.3 billion in the previous period, but below the average between 2015 and 2023. However, the number of enforcement actions were down 12% year-over-year while being 5% above the nine-year historic average.
The numbers crunched by Cornerstone Research also reveal that during five sweeps, the SEC focused on its FY2024 priorities with the 38 actions including 22 for companies’ use of off-channel communications. There was an increase in actions with broker dealer allegations accounting for 29% of all enforcement actions, up from 19% in the previous year.
There were also seven actions for violation of whistleblower protection rules, up from three in the previous fiscal year.
"The SEC's FY 2024 enforcement actions reveal a focus on trends like off-channel communications and whistleblower protection," said Stephen Choi, a report coauthor and the Bernard Petrie Professor of Law and Business at New York University School of Law and Co-Director of the NYU Pollack Center for Law & Business. "We also saw a focus on cooperation and non-monetary settlements, as the agency prioritized efficiency and cooperation in its enforcement approach."
Average settlements paid by firms of $19.8 million was up from $15 million in FY2023 but was above the 2015-2023 average of $24.7 million. The median amount was $3.2 million, down from $4 million in the previous year. The percentage of total monetary settlements from disgorgement and prejudgment interest in civil actions was 15%, the highest percentage since FY 2020.
The report also notes that 75% of the public companies and subsidiaries that cooperated with the SEC investigations in settled actions increased and 34 firms admitted guilt which is a new record.
SEC officials have emphasized that admissions of guilt are a powerful accountability measure," added Sara Gilley, a report coauthor and cohead of the Cornerstone Research securities litigation practice. "Former Director of the SEC's Division of Enforcement Gurbir Grewal indicated that the SEC brought more cases involving admissions of guilt than in prior years to enhance accountability. Our report's findings underscore these comments."
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