SEC Roundup 93: Is the SEC’s Penalty System Broken?

Описание: In this episode of SEC Roundup, co-hosts Nick Morgan and Tom Zaccaro are joined by David Slovick, partner at Kopecky Schumacher Rosenburg and former SEC and CFTC enforcement attorney, and Professor Phil Lieberman of Vanderbilt Law School. Together, they dig into one of the most overlooked—but impactful—problems in securities enforcement: the arbitrariness of civil penalties.

Phil and David recently published a series of articles examining how the SEC calculates penalties—and what their research reveals is deeply concerning. Using a custom-built AI-assisted database pulling 20 years of SEC litigation releases, Phil uncovers troubling trends, including:

• A steady “walk-up” of corporate penalties that outpace statutory guidelines
• Little-to-no transparency in how penalty amounts are calculated
• Inconsistent treatment of similar violations across different cases
• End-of-year enforcement surges that suggest goal-chasing behavior within the Commission

David walks us through the statutory “three-tier” penalty framework, showing how easily it’s manipulated. He explains how line-level SEC staff can multiply fines using vague definitions of “each violation”—turning one misstatement into dozens of six-figure penalties. He also shares reform ideas, from publishing penalty math to requiring real-time oversight by the Commission.

The episode closes by connecting these findings to SEC Chair Hester Peirce's calls for a fairer Wells process and more transparent enforcement outcomes.

If you’ve ever wondered why some enforcement actions seem disproportionately harsh—or suspiciously lenient—this episode is a must-listen. The data tells a story the SEC can no longer ignore.