Several factors may have contributed to the decline. Some have attributed it to the change in presidential administrations, which resulted in a change in top SEC leadership. For instance, a recent Cornerstone Research publication noted that after SEC Chairman Jay Clayton’s appointment, the number of enforcement actions against public companies dropped precipitously.
On the other hand, the SEC believes the drop in enforcement actions is almost entirely due to the conclusion of the SEC’s Municipalities Continuing Disclosure Cooperation Initiative (MCDC). The program encouraged self-reporting of fraud in municipal bond offerings. If MCDC proceedings were excluded from FY 2016, the SEC only filed 30 more enforcement actions in FY 2016 than in FY 2017, making the drop in filed cases much less striking.
