The empirical evidence suggests that firms overpay for fraud liability and overspend on internal compliance mechanisms (which are not very effective at preventing fraud). Yet, insiders who commit fraud are rarely sanctioned for their wrongdoing, which produces moral hazard and individual...

American securities enforcement agencies often face charges that they use their enforcement power to further political goals. Most recently, Standard & Poor's credit rating agency claimed that the U.S. Department of Justice unfairly singled it out for prosecution for fraudulent credit ratings...

Every October, after the end of its fiscal year, the Securities and Exchange Commission releases its annual enforcement report, detailing its activity for the year. The report boasts record enforcement activity, often showing significant increases over the prior fiscal year in the number of...

In Team Production Theory of Corporate Law, Margaret Blair and Lynn Stout made two related points. First, that Delaware law does not require rigid shareholder primacy in public corporations. Rather, the broad deference afforded to the decisions of predominantly independent corporate boards of...

The SEC's primary goal is enforcing compliance with securities laws. Almost as important but less visible is the SEC's rise as a source of compensation for defrauded investors. The Sarbanes-Oxley Act in 2002 expanded the SEC's ability to compensate investors by allowing the agency to distribute...

Financial disclosure fraud is economically harmful not only because it hurts buyers and sellers of public company stock — though it certainly hurts some — but because it produces considerable economic consequences that are not fully captured by stock price movements. A significant portion of...

Under the dominant account, fraudulent financial reporting by public firms harms the firms' shareholders and, more generally, capital markets. This Article contends that the account is incomplete. In addition to undermining investor confidence, misreporting distorts economic decision-making by...

Disgorgement of ill-gotten gain, similar to an unjust enrichment claim, is a common remedy in United States Securities and Exchange Commission (SEC) enforcement. In June 2017, the Supreme Court held in Kokesh v. SEC that disgorgement is a penalty. As such, the statute of limitations in section...

The Committee is considering two different kinds of legislative proposals. The first kind are improvements to the existing regime: rewarding PCAOB whistleblowers to encourage early reporting, improving the process for granting waivers from bad actor disqualifications, and increasing the civil...