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Addleman: A Look at SEC Enforcement Trends

In a paper prepared for the State Bar of Texas Annual Meeting later this month, Kit Addleman, a partner at the Haynes & Boone law firm has published a paper surveying the trends in SEC enforcement for the first half of 2011.  In summary, Addleman found:

[I]n the first six months of the new fiscal year 2011, the enforcement division is attempting to change things up. Although the overall enforcement program numbers still appear to be lower than prior years, and although the SEC suffered from a reduced budget in a continuing series of continuing resolutions in Congress through early April 2011, the SEC has brought a number of important cases involving public companies. Of those, cases involving public company disclosure and financial misstatements, insider trading, FCPA violations, and Regulation Fair Disclosure (Regulation FD) misconduct provide important lessons for company counsel and public company officials. First, the SEC continues to investigate the conduct of public companies and their officials; not all resources have been diverted to more trendy issues. Second, the SEC will consider preventative measures and cooperation in determining whether to bring an enforcement proceeding and in assessing appropriate penalties. Third, company officers and directors, even outside directors, who fail to respond to indications of wrongdoing and fail to discharge their responsibilities, may be held accountable by the SEC. And, finally, it is critical to remind company officials of their obligations under both the “hot” priority areas for the SEC as well as the less frequently pursued securities issues.

The paper provides an excellent summary of the types of enforcement cases the SEC has pursued in 2010 and 2011, and examines trends in executive compensation clawbacks, insider trading cases, cases under the Foreign Corrupt Practices Act, Reg FD, disclosure and reporting violations, and outside director liability issues.  

The full text of Addleman's paper is available at: