Measuring the Impact of SEC Enforcement Decisions

Abstract

This essay examines several metrics of Securities and Exchange Commission (SEC) decisionmaking that may be updated on a regular basis over time using publicly available data to give a picture of how SEC decisionmaking changes over time. I focus on SEC actions against public companies and subsidiaries of public companies and use data from the 2005 to 2018 period. The metrics include: the number of SEC actions per year and per month, the ratio of SEC actions to securities class actions by year, the mean abnormal return from an event study of the first public announcement of the problem that led to the eventual SEC enforcement action by year, the fraction of SEC actions with prior disclosure of the underlying violation by year, and the variability of the market response to the initiation of a SEC action by year. The metrics cannot demonstrate with certainty what motivates internal SEC enforcement decisions but may raise questions that guide future research.