The annual number of enforcement actions by the Securities and Exchange Commission decreased each year during the Trump administration. Starting at the high of 1,063 in 2016 and dropping to 827 in 2019, according to a tabulation in the Wall Street Journal. Now there is a new President and new Acting Chair of the Securities and Exchange Commission. Are enforcement actions going to increase?
Acting Chair Allison Herren Lee broadened the delegation of authority to senior officers in the Division of Enforcement. Under former Chair Clayton during the Trump administration, only the two co-heads of the Enforcement Division could approve the issuance of a Formal Order of Investigation. Now a broader group of officials in the Enforcement Division can do so.
Will this result in more enforcement actions? My guess would be “no.” I think the number of enforcement actions is correlated more to the size of the enforcement staff. It was reduced by about 8% during the Trump administration. Enforcement staff can only handle so many cases per person.
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