September 04, 2013
The SEC Likes Its Pound Of Flesh
Posted by David Zaring

Over at the Harvard Corporate Governance blog, Michael Klausner has some descriptive data on how often the SEC targets individual defendants in enforcement actions.

only 7 percent of cases involved no individual defendants. Focusing solely on cases involving at least one fraud count, only 4 percent of cases involved no individual defendants. In the remainder of cases, the SEC named either individual defendants only or it named both the corporation and individual defendants.... [T]he SEC names a wide range of individuals as defendants. It names CEOs in 56% of its cases, CFOs in 58% of cases, and lower level executives in 71% of cases. Regarding the scapegoat characterization, the SEC has targeted solely lower level executives in only 7% of its cases.

The charts alone are worth a look, so do check it out.

I'm not too surprised by this data, but it is nice to have it.  There seems to be a feeling in the enforcement community that a fine paid by a corporation isn't much of a fine at all, and that individual sanctions must be included.  The Klausner project certainly suggests that SEC practice is consistent with such a vision.

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