SEC imposed the highest total dollar amount of monetary penalties since 2021.
The U.S. Securities and Exchange Commission (SEC) drastically reduced its accounting and auditing enforcement activity in fiscal year 2024, the final year of Gary Gensler’s administration, ending two consecutive years of annual increases, according to a new report from Cornerstone Research. At the same time, monetary penalties reached their highest level since 2021.
The report, SEC Accounting and Auditing Enforcement Activity—Year in Review: FY 2024, found that the SEC initiated 45 accounting and auditing enforcement actions in FY 2024, a 46% decrease from FY 2023 and the lowest number since 2021. Approximately half of all actions (22) were initiated in the fourth quarter of the fiscal year, and more than one-third were initiated in September, the last month of the agency’s fiscal year.
“In addition to a decrease in enforcement activity, the SEC dismissed six administrative proceedings in FY 2024 after the U.S. Supreme Court’s decision in SEC v. Jarkesy on June 27, 2024.”
—Jean-Philippe Poissant
“In addition to a decrease in enforcement activity, the SEC dismissed six administrative proceedings in FY 2024 after the U.S. Supreme Court’s decision in SEC v. Jarkesy on June 27, 2024,” said Jean-Philippe Poissant, a report coauthor and cohead of Cornerstone Research’s accounting practice. “In contrast, the SEC imposed more than $770 million in monetary penalties in FY 2024, a 32% increase from FY 2023 and the highest total since 2021.”
The report also compares the Gensler period (FY 2021–FY 2024) to a comparable period under Jay Clayton (FY 2017–FY 2020), the SEC Chair during the first Trump administration. In contrast to other SEC priorities under Chair Gensler, such as cryptocurrency and off-channel communications, accounting and auditing enforcement activity generally declined. During the Gensler period, the SEC initiated an average of 60 enforcement actions per year, compared to 74 during the Clayton period. Settled actions declined under Chair Gensler, dropping nearly 20% to an average of 66 settled actions per year, compared to 80 under Chair Clayton.
“Looking back to the last eight years, our analysis shows that enforcement actions with accounting and auditing allegations were less of a priority than other emerging allegations under Chair Gensler.”
—Simona Mola
“Looking back to the last eight years, our analysis shows that enforcement actions with accounting and auditing allegations were less of a priority than other emerging allegations under Chair Gensler,” added Simona Mola, a report coauthor and principal at Cornerstone Research. “In the four fiscal years of the Gensler period, the SEC accounting and auditing enforcement activity overall declined relative to the Clayton period in terms of total number of actions initiated or settled. The average total settlement amount per year during the Gensler period also declined to $647 million, down from $796 million imposed during the Clayton period.”