Wednesday, November 14, 2012


Labaton Sucharow's New Public Database and SEC Sanctions Report Maps Misconduct Around the U.S.

Unique resource created by former SEC insider reveals startling statistics regarding SEC enforcement actions and reinforces potential of SEC Whistleblower Program


NEW YORK (November 14, 2012) – Labaton Sucharow LLP today announced the launch of its SEC Sanctions Database, a web-based tool that provides the public with information on significant SEC enforcement actions since the passage of the Sarbanes-Oxley Act in 2002 through September 30, 2012. The Firm's research focused on six of the most common federal securities violations – Financial Fraud, Offering Fraud, Foreign Corrupt Practices Act (FCPA), Trading & Pricing, Municipal Securities and Market Manipulation – and offers information on the parties and monetary sanctions related to enforcement actions where the Commission's sanctions exceeded $1 million. The easy-to-use and searchable database also provides an interactive map function that offers users a visual snapshot of the location and concentration of significant SEC enforcement activity.

Labaton Sucharow's SEC Sanctions Report maps misconduct throughout the U.S. and includes both national statistics as well as data specific to regions, states and foreign jurisdictions. The size, diversity and number of SEC enforcement actions in excess of $1 million demonstrate the enormous investor protection potential of the SEC Whistleblower Program—which currently has over $450 million available to pay eligible whistleblowers. The top 10 findings are:

  • Of the six common securities violations examined in the analysis, which are defined and discussed throughout the report, the SEC successfully prosecuted 457 enforcement actions where the monetary sanctions exceeded $1 million, with aggregate monetary relief for injured investors in excess of $65 billion;

  • Approximately 10 percent of these actions involved corporate defendants in foreign jurisdictions;

  • More than 61 percent of the cases involving corporate defendants in foreign jurisdictions occurred in the last five years;

  • Two-thirds of all actions surveyed involved corporate defendants in the United States;

  • In actions involving U.S. corporate defendants, nearly 15 percent of these enforcement actions resulted in orders for monetary relief in excess of $50 million;

  • Of the 307 actions involving corporate defendants in the U.S., 36 percent were prosecuted in the Northeast region of the United States. This was followed by the Southern region (32 percent); the Western region (25 percent); and the Midwestern region (7 percent);

  • Offering Fraud was the most common violation, representing approximately 40 percent of all enforcement actions in the data set. This was followed by Financial Fraud (31 percent); FCPA (12 percent); Market Manipulation (9 percent); Trading & Pricing (6 percent); and Municipal Securities Fraud (2 percent);

  • More than 90 percent of all FCPA actions were brought within the last five years;

  • Individuals – as differentiated from corporate defendants – have played a major role in significant securities cases, representing approximately 22 percent of all actions in the data set. Corporate defendants were involved in 27 percent of actions; and just over half of all actions in the analysis combined both corporate and individual defendants; and

  • Approximately 57 percent of all enforcement actions included in the data set occurred within the last five years.

Jordan Thomas, partner and Chair of the Whistleblower Representation Practice at Labaton Sucharow commented: "In some ways, SEC enforcement actions are like great stories filled with interesting characters, surprising plot twists and heartbreaking tragedy. The information regarding occurrences of misconduct, violations and enforcements included in the report only reinforces the need for and potential of the SEC Whistleblower Program. Our hope is that this powerful public database will empower responsible organizations to learn from the corporate scandals of the past and show the public how securities violators have been held accountable for their wrongdoing."

A former Assistant Director and Assistant Chief Litigation Counsel in the Enforcement Division of the SEC, Thomas played a leadership role in the development of the agency's new Whistleblower Program.  It offers eligible whistleblowers significant employment protections, monetary awards, and the ability to report possible securities violations anonymously. Labaton Sucharow's SEC Sanctions Database is housed on www.secwhistlebloweradvocate.com, the definitive resource for potential whistleblowers including videos, comprehensive legal primers, a whistleblower eligibility calculator and timely blog entries. "This resource, along with our firm's other proprietary securities research, has been developed to assist potential whistleblowers in making the difficult decision whether, when and how to report possible securities violations, as well as to encourage responsible organizations to establish a culture of integrity," said Jordan Thomas.

"In September of this year, our second annual Ethics & Action Survey found that 72 percent of Americans were unaware of the new SEC Whistleblower Program. That surprising fact fuels our work to educate the public about the SEC Whistleblower Program and the importance of whistleblowers coming forward—internally or externally," continued Thomas. "Whistleblowers can provide their organizations and law enforcement authorities with early and invaluable assistance in identifying the scope, participants, victims and ill-gotten gains associated with securities violations. This serial fraud will only stop when individuals take a stand. Now they can, without fear or regrets."