SEC spokeswoman Judy Burns didn’t immediately respond to a request for comment.
Hurting Shareholders
Not only did penalties go down in the aggregate for fiscal 2017 compared with the year earlier, but the median fine did as well, falling 35 percent, according to Velikonja’s analysis. She attributes that drop to the Republican view that corporate fines harm shareholders, who have often already been hurt when the allegations of wrongdoing drive down companies’ stock price.
For his part, Clayton has said the SEC won’t let up on enforcement under his watch and will be particularly focused on violations that impact mom-and-pop investors. There may also be other explanations for the drop in fines.
Cases brought by the SEC can often take years to develop, and agency leadership often strives to finish its most high-profile investigations as presidential administration’s draw to a close. Clayton’s enforcement team could now be in the position of rebuilding its pipeline of cases, with settlements against companies and individuals coming some time in the future.
For instance, in the first fiscal year of the Obama administration, the SEC sought $2.4 billion in penalties. In subsequent years, that number steadily rose as the agency pursued cases stemming from the 2008 financial crisis.
The regulator is also having to do more with less. Earlier this year, the agency cut back on non-essential travel, imposed a hiring freeze and curbed the use of outside contractors who assist SEC lawyers with cases. And until Clayton was confirmed, the SEC was down to two commissioners who voted on cases; one Republican and one Democrat. Without a tiebreaker vote, many cases were left in limbo for months.
— With assistance by Anders Melin.
This article was provided by Bloomberg News.