The early part of the last decade was a busy time for the Securities and Exchange Commission, as it responded to a corporate crime wave perpetrated by companies such as Enron, WorldCom, and HealthSouth. It filed a record 679 enforcement actions during its 2003 fiscal year. Of those, 199 cases—or nearly 30 percent (also a record high)—fell into the category of financial fraud and issuer disclosure cases. In the 10 years that have followed, the number of financial fraud cases brought by the SEC has steadily declined. Indeed, in 2012, the agency brought just 79 financial fraud or issuer disclosure cases, a 10-year low that has drawn the attention of the SEC’s new chairman, Mary Jo White. What has caused the marked decline in financial fraud cases over the past 10 years? Is the decline due to better corporate citizenship or a decline in the Commission’s ability to prosecute cases? And what, if anything, should the SEC do to reverse this trend?
