SEC Settlements Trends: 1H11 Update

Mon Jun 27 16:24:38 EDT 2011
By Dr. James Overdahl et al.

The latest report from NERA's ongoing analysis of trends in Securities and Exchange Commission (SEC) enforcement action settlements finds that the number of company settlements jumped 43% in the first half of fiscal year 2011 (1H11) to 114. That puts company settlements on pace for 228 in FY2011, compared to the 160 company settlements recorded in FY2010. Overall, the SEC settled with 344 defendants in 1H11, putting the agency on pace to settle with 688 defendants for the full year, compared to the 681 settlements in fiscal year 2010.
While total SEC settlements have remained stable compared to the previous fiscal year, there has been a substantial shift in their composition, according to the authors. Although the number of company settlements rose sharply, the number of individual settlements declined 12% in the first half of the year to 230, an annual pace of 460, compared to 521 in FY10. For companies whose settlements included a monetary payment, the average amount declined to $6.0 million compared to $18.5 million in FY10. However, the median company settlement increased to $1.4 million, compared to $0.8 million in FY10. For individuals whose settlements include a monetary payment, the average was $4.48 million and median amount was $310,000. Both figures are greater than any full fiscal year since SOX was implemented.
The report's findings are informed by NERA's proprietary database of settlements in SEC enforcement actions, which is based on litigation releases and administrative proceeding documents.