In a remarkable turn of events, enforcement actions instituted by the U.S. Securities and Exchange Commission (SEC) against public companies and subsidiaries experienced a 34% increase in fiscal year 2023, amounting to 91 filings. Evident from a report announced by the NYU Pollack Center for Law & Business and Cornerstone Research, this surge marked a stark contrast to the preceding fiscal year 2022. Full details can be found here.
Though the rise in actions is notable, it is juxtaposed by a sharp decrease in the monetary worth of settlements, which landed at the lowest level within the past eight fiscal years. These financial resolutions in public company and subsidiary actions reduced to an estimated $1.3 billion. Such a decline highlights the complex dynamic between regulatory enforcement and monetary penalties, often the focus of many legal professionals worldwide.
The shift in the SEC’s strategy can have significant implications for the business and legal community. Legal professionals, in particular, may need to adopt measures for their corporation or law firm to stay ahead of the changing tides in enforcement.
Indeed, understanding this anomaly – the simultaneous increase in enforcement actions and decrease in settlements- requires further exploration and analysis.
Nevertheless, these figures underscore the vital role played by law and business professionals in ensuring robust corporate governance structures, navigating the regulatory landscape, and mitigating risks arising from potential violations.