SEC Public Company Enforcement Dipped Sharply in 2025

During fiscal year 2025, the Securities and Exchange Commission brought 30 percent fewer cases against public companies and their subsidiaries than in FY 2024, and 93 percent of the 2025 cases were brought before January 25, 2025 – the day on which Biden Administration SEC Chair Gensler resigned.  Those findings are reported in SEC Enforcement Activity: Public Companies and Subsidiaries—Fiscal Year 2025 Update, the annual report of Cornerstone Research and the New York University Pollack Center for Law & Business on SEC enforcement actions against public companies.  Cornerstone and the Pollack Center issued a press release on November 19 summarizing their 2025 report. In addition to the drop in total public company actions, the press release notes that monetary settlements in FY 2025 were the lowest for any year with an SEC administration change and the second-lowest in the Cornerstone/NYU database.

The Cornerstone/Pollack Center report analyzes information from the Securities Enforcement Empirical Database (SEED),  which tracks SEC enforcement actions against public companies and subsidiaries since FY 2010.  For a discussion of last year’s report, see SEC Enforcement in 2024: Fewer Cases But More in Penalties, December 2024 Update.

Number of Actions Against Public Companies and Their Subsidiaries

During FY 2025 (October 1, 2024, to September 30, 2025), the SEC initiated 56 actions against public companies and their subsidiaries.  Fifty-two of those actions were brought under Chair Gensler and four under the new, post-inauguration SEC administration.  (Mark Uyeda served as Acting Chair following Chair Gensler’s resignation and Paul Atkins became Chair on April 21).  In comparison, in FY 2024, the Commission brought 80 enforcement actions against public companies and subsidiaries.

The SEC initiated three public company actions in the second half of FY 2025, two of which were brought in the fourth quarter. Both the second-half and fourth-quarter numbers were the lowest in SEED by a wide margin. The prior second-half low was 19 in FY 2017, and the prior fourth-quarter low was six in FY2011.

The Cornerstone/Pollack Center report suggests that the decline in enforcement activity may be temporary:

“The reduced enforcement activity in FY20 25 under Chair Atkins may be in part due to the higher number of actions earlier in the fiscal year under Chair Gensler as well as the change SEC priorities and the appointment of a new Director of Enforcement, Military Judge Margaret ‘Meg” Ryan, who was sworn in on September 2, 2025.  Enforcement activity under Chair Atkins could see a boost as Judge Ryan has more time in her role and Chair Atkins's priorities are more firmly established.” (footnotes omitted)

Settlement Amounts

The SEC imposed monetary relief totaling $808 million in public company cases settled during FY 2025.  This represents the second-lowest annual settlement amount in SEED and is less than half of the FY 2016 – FY 2024 average annual monetary settlement total of $1.9 billion. In FY 2024, total monetary settlements in public company cases were to $1.5 billion. In FY 2025, the average monetary settlement was $15 million, down from $19.8 million in FY 2024 and the second-lowest since 2016.  However, the median monetary settlement of $4 million was higher than the fiscal year 2024 median of $3.2 million. Civil penalties accounted for roughly 85 percent of the total 2025 settlement amount, while disgorgement and prejudgment interest were about 15 percent.

Focus on Issuer Reporting and Disclosure

Forty-one percent of the FY 2025 SEC actions against public companies and subsidiaries included allegations of issuer reporting and disclosure violations.  This was ten percent higher than the 31 percent that included such charges in FY 2024 and higher than the 38 percent average from 2016-2024. Three of the four public company actions filed under the new SEC administration included charges related to reporting and disclosure. The Cornerstone/Pollack Center report predicts: “Actions with issuer reporting and disclosure allegations are expected to continue into FY 2026 as chair Atkins has signaled his administration will ‘return’ to the ‘core mission that Congress set’ for the SEC, which prioritizes ‘protecting investors; furthering capital formation; and safeguarding fair, orderly, and efficient markets.’”

Cooperation

According to the report, the SEC noted cooperation in its settlements with 73 percent of public company and subsidiary defendants in FY 2025. (There were 66 settling defendants in FY 2025.)  While slightly lower than the 75 percent cooperation rate in 2024, the 2025 rate was higher than the FY 2016 to FY 2024 average of 65 percent and the third highest of any fiscal year in SEED. The report attributes the level of cooperation to former Chair Gensler's support for the practice. A defendant is deemed to have cooperated based on self-reporting, remediation, and the SEC’s noting cooperation in the settlement announcement.

Audit Committee Takeaways

For audit committees interested in anticipating the level and focus of the SEC’s enforcement program over the next several years, the 2025 Cornerstone/Pollack Center report provides only limited guidance.  It could suggest a lessening of SEC enforcement intensity. The sharp drop in public company cases following the change in SEC leadership might support that view, as does Chair Atkins’s repeated statements that the SEC should stop “regulation by enforcement” and avoid bringing cases based on creative or novel legal theories.  See, e.g., Keynote Address at the 25th Annual A.A. Sommer, Jr. Lecture on Corporate, Securities, and Financial Law (October 7, 2025).

However, there is also reason to anticipate that the new SEC will be active in enforcing public company disclosure and reporting requirements.  As noted above, Chair Atkins has stressed returning the agency to its core mission, which suggests that traditional disclosure and reporting matters will be a priority, at least where they involve allegations of fraud. Moreover, policy changes may not be the primary cause of the drop in enforcement actions against public companies following Chair Gensler’s departure.  The advent of the new presidential Administration corresponded with a substantial reduction in SEC staffing, in part due to voluntary departures and in part due to DOGE-inspired initiatives. Therefore, the Commission may simply not have had sufficient personnel to continue enforcement at prior levels.  Over time, that constraint is likely to be mitigated.

On balance, audit committees should assume that SEC enforcement will remain active where public companies have engaged in fraudulent reporting.  It is, however, likely that, during the next three years, the Enforcement Division will not pursue novel cases, such as those that seek to expand the scope of the internal control requirements into new realms.  See SEC Seeks Shelter from Solar Winds Case in this Update.  Bread-and-butter fraud-based disclosure enforcement against public companies and their insiders is, however, likely to continue, if not intensify.