by Robin M. Bergen, Matthew C. Solomon, Alex Janghorbani, Jenny Paul and Samuel H. Chang

On November 6, 2019, the SEC’s Division of Enforcement released its annual report (the “Report”) describing its enforcement actions from fiscal year 2019.[1] Like prior reports, the Report quantifies the Division’s activities in a number of ways and discusses priority areas going forward. The Report also brings front-and-center certain challenges the Division has faced—including difficulties navigating recent Supreme Court decisions that call into question the constitutionality of the SEC’s administrative proceedings and the agency’s ability to obtain disgorgement, as well as the impact of the government shut-down and general resource constraints.

Notwithstanding these challenges, the Report somewhat surprisingly cites a 7% increase from last year in so-called “standalone” enforcement actions[2]—the true metric of the Division’s enforcement footprint because they exclude actions such as issuer delistings that entail little to no investigation. Although the Division brought cases in some areas where it had not been active for some time (including the first standalone Regulation FD case since 2013) and several of the settlements highlighted in the Report plainly resulted from substantial investigations, it is difficult to draw definitive conclusions regarding regulatory intensity from numbers alone in light of the Division’s ongoing initiatives and shifting enforcement priorities. To take one example, actions against investment advisers and investment companies in FY 2019 nearly doubled from the year before, but this increase was largely attributable to 95 settlements that resulted from self-reports in the SEC’s Share Class Selection Disclosure initiative. Continue reading →