| WASHINGTON, Sept 24
WASHINGTON, Sept 24 The U.S. Securities and
Exchange Commission's metrics for computing annual enforcement
statistics are "deeply flawed," making the agency falsely appear
as though it is getting tougher every year, a new academic study
The draft study by Emory University law professor Urska
Velikonja, slated to be published in the Cornell Law Review,
examined 15 years worth of SEC enforcement data.
It found that a host of problems, including double-counting
cases, has enabled the SEC to "mask the fact that core
enforcement has remained steady since 2002."
"They way that the SEC counts enforcement actions filed and
aggregate monetary penalties ordered consistently overstates the
SEC's enforcement output, masks trends, obscures real problems
in enforcement, and reveals non-existent 'problems'
that the SEC then tries to resolve," the study said.
SEC Enforcement Director Andrew Ceresney said the agency
disagrees with a number of observations in the study, which it
was still reviewing.
"We have consistently and transparently reported our
enforcement numbers for years, but as we have emphasized, first
and foremost is the quality of our cases, which span the
securities industry, include first-of-their kind actions,
aggressive use of industry and other types of bars, and
demonstrate successful pursuit of wrongdoers," he said in a
The fiscal year 2015 will end on Sept. 30, and the SEC is
expected to report its annual statistics as soon as October.
The study criticized the SEC for counting multiple
enforcement actions separately, even if they arise out of the
same case. For instance, it said the SEC may charge a company in
federal court, then file a handful of separate actions to bar
individuals from the industry for misconduct in the same matter.
It also said the SEC has ramped up the number of
"easy-to-bring delinquent filing cases," in which a company
fails to file timely financial reports as required by law.
These are strict liability cases, meaning the agency need
not show a company intended to violate the law.
The increase in these cases, the study suggested, may help
obscure true enforcement trends.
Several news outlets in the past have also raised similar
questions about how the SEC tallies its cases. The agency has
consistently defended itself, saying it is transparent about the
statistics and how they are tallied.
(Reporting by Sarah N. Lynch; Editing by David Gregorio)