The number of federal prosecutions against securities fraud is far lower under the Bush administration, according to new data. Indeed, the NY Times reports that this year, federal officials are on pace to bring the fewest prosecutions for securities fraud since at least 1991, according to data compiled by Syracuse University researchers.
According to the research,
there were 133 prosecutions for securities fraud in the first 11 months of this fiscal year. That is down from 437 cases in 2000 and from a high of 513 cases in 2002, when Wall Street scandals from Enron to WorldCom led to a crackdown on corporate crime, the data showed.
At the S.E.C., agency investigations that led to Justice Department prosecutions for securities fraud dropped from 69 in 2000 to just 9 in 2007, a decline of 87 percent, the data showed.
The SEC’s Scott Friedstad, Deputy Director of Enforcement, said the numbers did not reflect “the reality that I see on the ground. We are as committed as ever to vigorous enforcement efforts,” he said.
Bernstein Litowitz’s Sean Coffey told the NY Times that the SEC’s enforcement efforts have been “awful” and that the SEC has “neutered the ability of the enforcement staff to be as proactive as they could be. It’s hard to square the motto of investor advocate with the way they’ve performed the last eight years.” He said the declining number of stock fraud prosecutions may be partly a result of the backlash the Bush administration experienced after its aggressive pursuit of corporate crime following the Enron collapse in 2002.