Long ago, while working for the SEC, I lead an investigation into the conduct of a research analyst named Paul Johnson. Johnson refused to settle with the SEC and went to trial, where he was found liable for fraud. At the time of Johnson’s trial, I was under the impression that SEC trials in federal court were fairly common. To my amazement, I was completely wrong in that belief. There were very few trials then and there are even fewer today. The reality is that the likelihood of any SEC case of significance ever making it to trial is pretty close to zero. In fiscal year 2016, the SEC had just six trials, which matched the number it had in fiscal year 2015. When you consider that the SEC Division of Enforcement has 150 or so trial unit attorneys, the number of cases that the Division takes to trial each year seems ridiculously small. So the obvious question is: How can the SEC expect to attract talented trial attorneys when there are so few cases to try?
The SEC in Action 