Trends in SEC Enforcement: 2Q23 – Conclusion
This is the final installment of this series. The first installment focused on statistics for the second quarter of 2023, noting that 46 enforcement actions were filed by the SEC. The second part of the series provided examples of the cases in four largest categories of actions filed during the period – offering frauds, insider trading, manipulation and financial fraud. The third segment presented other cases of note filed during the period.
Neither the number of cases filed during the second quarter of 2023 nor the variety of actions initiated were noteworthy compared to other periods. During periods more that 46 new enforcement actions have been filed during a number of periods as noted earlier in the series. Equally clear is the fact that in some earlier periods the number of new cases initiated were less. Filing 46 new actions falls some place in the middle.
The number of cases filed is not, however, determinative of results. Those can only be evaluated over time and by considering a number of factors. When focusing on one period as here, period the other key metric is the variety of cases filed. During the second quarter not only was the number of cases initiated less that during the same period one year earlier, but those cases that were filed were more heavily concentrated in fewer areas. In contrast, one of the hallmarks of enforcement in recent periods has been the variety of cases initiated during the quarter.
The variety of actions filed in earlier periods helped to sending a clear and unequivocal signal to the market place that virtually anywhere one turned, SEC enforcement was about, monitoring the market and protecting investors. In contrast, the statistics on numbers of cases coupled with a concentration of about 30% in offering frauds for 2Q23 unfortunately sends the wrong signal to the markets and investors, strongly suggesting that the once ubiquitous market cop was not likely to be around and about to ensure investor protection and market integrity.
All of this is not to say there were not bright spots during 2Q23. Enforcement did cover a number of areas such as SARS, perks, municipal offerings and the liquidity rule. Each is an important area.
The agency also continued to focus on crypto assets, another important area given the amount of resources continually flowing into those assets. Perhaps the most significant cases in this respect were SEC v. Sun and SEC v. Bittrex. The former is an action against one of the world’s largest players in the crypto asset area. The latter is an action centered on a trading platform, a critical area of focus in this area given the role the platforms play in the market.
Finally, the key question presented by 2Q23 is its influence. In the future will enforcement continue to focus on only a handful of areas and dimmish the number of cases brought as in 2Q23 or return to the approach used earlier when more cases were filed in a much winder number of areas?
In the future, the Commission, investors and the markets would be well served by a return to the prior approach of large numbers of cases coupled with a far greater variety of areas of focus.
Trends in SEC Enforcement: 2Q23 – Conclusion
This is the final installment of this series. The first installment focused on statistics for the second quarter of 2023, noting that 46 enforcement actions were filed by the SEC. The second part of the series provided examples of the cases in four largest categories of actions filed during the period – offering frauds, insider trading, manipulation and financial fraud. The third segment presented other cases of note filed during the period.
Neither the number of cases filed during the second quarter of 2023 nor the variety of actions initiated were noteworthy compared to other periods. During periods more that 46 new enforcement actions have been filed during a number of periods as noted earlier in the series. Equally clear is the fact that in some earlier periods the number of new cases initiated were less. Filing 46 new actions falls some place in the middle.
The number of cases filed is not, however, determinative of results. Those can only be evaluated over time and by considering a number of factors. When focusing on one period as here, period the other key metric is the variety of cases filed. During the second quarter not only was the number of cases initiated less that during the same period one year earlier, but those cases that were filed were more heavily concentrated in fewer areas. In contrast, one of the hallmarks of enforcement in recent periods has been the variety of cases initiated during the quarter.
The variety of actions filed in earlier periods helped to sending a clear and unequivocal signal to the market place that virtually anywhere one turned, SEC enforcement was about, monitoring the market and protecting investors. In contrast, the statistics on numbers of cases coupled with a concentration of about 30% in offering frauds for 2Q23 unfortunately sends the wrong signal to the markets and investors, strongly suggesting that the once ubiquitous market cop was not likely to be around and about to ensure investor protection and market integrity.
All of this is not to say there were not bright spots during 2Q23. Enforcement did cover a number of areas such as SARS, perks, municipal offerings and the liquidity rule. Each is an important area.
The agency also continued to focus on crypto assets, another important area given the amount of resources continually flowing into those assets. Perhaps the most significant cases in this respect were SEC v. Sun and SEC v. Bittrex. The former is an action against one of the world’s largest players in the crypto asset area. The latter is an action centered on a trading platform, a critical area of focus in this area given the role the platforms play in the market.
Finally, the key question presented by 2Q23 is its influence. In the future will enforcement continue to focus on only a handful of areas and dimmish the number of cases brought as in 2Q23 or return to the approach used earlier when more cases were filed in a much winder number of areas?
In the future, the Commission, investors and the markets would be well served by a return to the prior approach of large numbers of cases coupled with a far greater variety of areas of focus.