SEC Enforcement Trends: First Quarter 2024, Part I
This is one of a series that analyzing trends in SEC enforcement on a quarterly basis. The series traces back to the beginning of 2020, identifying the types and numbers of cases filed to discern trends. This is Part I of a four part series analyzing trends in SEC Enforcement during the first quarter of 2024. The remaining segments will be published over the next several days.
In the first quarter of 2024 the SEC filed a total of 52 new actions. That number is close to the ones recorded for 2020 and 2021. In the first quarter of each of those years a total of 48 enforcement cases were filed. Likewise, in the first quarter of 2022, 53 new cases were filed, just one more than in 2024. In contrast, 2023 appears to have been an outlier. In the first quarter of that year the Commission filed a total of 80 new enforcement actions.
The 52 actions filed during the first quarter of 2024 were primarily administrative proceedings. During the period 20 of the cases filed were civil injunctive actions while 34 were administrative proceedings. This contrasts with each other year since 2020. In each quarter since the beginning of this decade the largest number of actions filed has been civil injunctive cases. For example, in the first quarter of 2023, 48 civil injunctive actions were filed while only 32 administrative proceedings were initiated. Similarly, in the first quarter of each year beginning in 2020, the largest number of cases filed in the first quarter was civil injunctive cases, not administrative proceedings.
During the first quarter of 2024 the number of administrative proceedings was significantly impacted by the filing of sixteen administrative proceedings in February as part of an initiative focused on record keeping violations discussed below. Nevertheless, even setting aside the 16 administrative proceedings that were part of those filed in 1Q 24, just over half of the cases filed during the quarter were administrative proceedings.
The types of actions being initiated are also critical. In the first quarter of this year the types of actions filed are depicted in the table below:
Books and records 30%
Offering frauds 17%
False statements 17%
Manipulation 10%
Financial fraud 8%
As this table reflects, the type of cases filed during the period was dominated by the administrative proceedings filed as part of the focus on books and records. The mix of cases initiated during the quarter was dominated by the February effort focused on corporate books and records. That effort keyed to the practices of some firms which permitted professionals at various firms to use personal communication devices as a form of communications rather than those which were part of the system created and maintained by firm under the Commission’s rules.
Those results reflect more than just a technical violation of the rules. To the contrary, the repeated used of unauthorized processes of communication highlights what may be important gaps in firm record keeping since in many instances there was no written record of the communications done on personal devices. That contrasts with those systems used by most firms under Commission rules which require written records.
The mix of cases filed in the first quarter of 2024 – setting aside the books and records actions — is similar also, but not the same as those for other comparable periods. For example, in the first quarter of 2023, when 80 actions were filed, the largest categories of actions initiated were: offering fraud cases, crypto assets, insider trading and financial fraud. Two of the categories listed above for the first quarter of 2024 – offering fraud and financial fraud cases — are the same as those in 1Q23 while two are not.
Examination of the largest categories in 2022 and 2021 yields slightly different results. In 2022 the largest categories of cases initiated were those involving investment advisers, insider trading, offering fraud actions and corporate and financial cases. In contrast, for 2021 the largest categories were those involving misrepresentations, offering fraud, investment advisers and unregistered brokers. Thus, the only common category during those two years was offering fraud cases – most of the largest categories of cases in 2022 and 2021 were different. While in each year since 2020 one of the largest categories of cases is offering fraud actions, the other three or four largest groups of cases initiated differed. Overall, this reflects a shifting focus driven in part by typical areas of concern such as offering fraud cases and in part by the changing trends of the marketplace.
Next: Examples of key cases from the largest groups of action
SEC Enforcement Trends: First Quarter 2024, Part I
This is one of a series that analyzing trends in SEC enforcement on a quarterly basis. The series traces back to the beginning of 2020, identifying the types and numbers of cases filed to discern trends. This is Part I of a four part series analyzing trends in SEC Enforcement during the first quarter of 2024. The remaining segments will be published over the next several days.
In the first quarter of 2024 the SEC filed a total of 52 new actions. That number is close to the ones recorded for 2020 and 2021. In the first quarter of each of those years a total of 48 enforcement cases were filed. Likewise, in the first quarter of 2022, 53 new cases were filed, just one more than in 2024. In contrast, 2023 appears to have been an outlier. In the first quarter of that year the Commission filed a total of 80 new enforcement actions.
The 52 actions filed during the first quarter of 2024 were primarily administrative proceedings. During the period 20 of the cases filed were civil injunctive actions while 34 were administrative proceedings. This contrasts with each other year since 2020. In each quarter since the beginning of this decade the largest number of actions filed has been civil injunctive cases. For example, in the first quarter of 2023, 48 civil injunctive actions were filed while only 32 administrative proceedings were initiated. Similarly, in the first quarter of each year beginning in 2020, the largest number of cases filed in the first quarter was civil injunctive cases, not administrative proceedings.
During the first quarter of 2024 the number of administrative proceedings was significantly impacted by the filing of sixteen administrative proceedings in February as part of an initiative focused on record keeping violations discussed below. Nevertheless, even setting aside the 16 administrative proceedings that were part of those filed in 1Q 24, just over half of the cases filed during the quarter were administrative proceedings.
The types of actions being initiated are also critical. In the first quarter of this year the types of actions filed are depicted in the table below:
Books and records 30%
Offering frauds 17%
False statements 17%
Manipulation 10%
Financial fraud 8%
As this table reflects, the type of cases filed during the period was dominated by the administrative proceedings filed as part of the focus on books and records. The mix of cases initiated during the quarter was dominated by the February effort focused on corporate books and records. That effort keyed to the practices of some firms which permitted professionals at various firms to use personal communication devices as a form of communications rather than those which were part of the system created and maintained by firm under the Commission’s rules.
Those results reflect more than just a technical violation of the rules. To the contrary, the repeated used of unauthorized processes of communication highlights what may be important gaps in firm record keeping since in many instances there was no written record of the communications done on personal devices. That contrasts with those systems used by most firms under Commission rules which require written records.
The mix of cases filed in the first quarter of 2024 – setting aside the books and records actions — is similar also, but not the same as those for other comparable periods. For example, in the first quarter of 2023, when 80 actions were filed, the largest categories of actions initiated were: offering fraud cases, crypto assets, insider trading and financial fraud. Two of the categories listed above for the first quarter of 2024 – offering fraud and financial fraud cases — are the same as those in 1Q23 while two are not.
Examination of the largest categories in 2022 and 2021 yields slightly different results. In 2022 the largest categories of cases initiated were those involving investment advisers, insider trading, offering fraud actions and corporate and financial cases. In contrast, for 2021 the largest categories were those involving misrepresentations, offering fraud, investment advisers and unregistered brokers. Thus, the only common category during those two years was offering fraud cases – most of the largest categories of cases in 2022 and 2021 were different. While in each year since 2020 one of the largest categories of cases is offering fraud actions, the other three or four largest groups of cases initiated differed. Overall, this reflects a shifting focus driven in part by typical areas of concern such as offering fraud cases and in part by the changing trends of the marketplace.
Next: Examples of key cases from the largest groups of action