In a recent post, The D&O Diary examined the SEC’s fiscal year 2026 enforcement results, which reflected a significant decline in agency activity under SEC Chair Paul S. Atkins. While agency officials emphasized that enforcement statistics alone do not fully measure the effectiveness of the SEC’s program, the data showed substantial decreases in both enforcement actions and financial remedies.
The SEC’s annual figures also provide important context for a newly released report from Cornerstone Research and the NYU Pollack Center for Law & Business examining SEC actions against public companies and subsidiaries. The study found that the SEC initiated only 16 actions against public companies and subsidiaries during FY 2026, a 71% decline from the prior year and the lowest annual total in the history of the study.
As discussed below, both the SEC’s FY 2026 statistics and Cornerstone’s analysis point to a broader decline in regulatory activity during the year, while also highlighting continuing areas of focus. Developments in private securities litigation, however, suggest that corporate liability exposures continue to evolve in ways that remain highly relevant for public companies and D&O underwriters.
SEC FY 2026 Enforcement Results
The SEC reported that its FY 2026 enforcement program remained focused on what it characterized as serious and consequential violations of the federal securities laws, emphasizing investor protection, market integrity, and individual accountability. In announcing the annual results, SEC Chairman Paul S. Atkins cautioned against evaluating the program solely through enforcement statistics.
As Chairman Atkins stated:
“The success of the SEC’s enforcement program is ultimately measured by how effectively it advances the SEC’s mission, protects investors, holds wrongdoers accountable, and strengthens confidence in our markets. Enforcement actions and financial remedies are important measures of activity, but they are not the only or most telling measures.”
Although overall enforcement activity declined, the agency stressed that it continued to pursue what it characterized as “serious and consequential violations” involving fraud, market manipulation, insider trading, gatekeeper misconduct, and violations affecting the integrity of disclosures and financial reporting.
The SEC also highlighted that two-thirds of all standalone enforcement actions filed during FY 2026 included charges against at least one individual, which the agency cited as evidence of its continued focus on accountability and deterrence. Overall, the SEC filed 348 enforcement actions during FY 2026, obtained orders totaling approximately $1.095 billion in monetary relief, and returned roughly $731 million to more than 250,000 harmed investors. The agency also noted that it instituted 13 trading suspensions in response to suspected manipulation involving Asia-based issuers.
Cornerstone Report Findings
According to the report, the SEC initiated only 16 enforcement actions against public companies and subsidiaries during FY 2026, compared to 56 actions in FY 2025. The 71% year-over-year decline represents the largest annual decrease recorded in the Securities Enforcement Empirical Database (SEED) and resulted in the lowest annual total since the database’s inception. The number was less than half the previous low-water mark of 37 actions recorded in FY 2013.
The decline was equally pronounced when measured by monetary recoveries. Total monetary settlements fell to $184 million, also a record low and more than $600 million below the FY 2025 total. The average monetary settlement declined to $12 million, while the median settlement dropped to just $1 million, the second-lowest median figure recorded during the study period.
The Cornerstone report suggests that these figures are consistent with Chair Atkins’s stated view that the SEC should emphasize the quality rather than the quantity of enforcement actions. Even so, several aspects of the report indicate that the SEC has continued to focus on certain categories of misconduct. Half of all FY 2026 enforcement actions involved issuer reporting and disclosure allegations, matching the highest proportion recorded in the database. The report also found that actions naming individual defendants accounted for the highest percentage of cases seen in the last decade, reflecting the current SEC leadership’s stated emphasis on individual accountability.
The percentage of defendants required to make monetary payments reached its lowest level since FY 2010, while admissions of wrongdoing fell to zero. No public company or subsidiary defendant admitted guilt during FY 2026, compared to an average of 21 defendants annually between FY 2022 and FY 2025. At the same time, civil penalties accounted for 99% of all monetary settlements imposed during the year, the highest percentage recorded in the study.
Discussion
The Cornerstone report suggests that these figures are consistent with Chair Paul S. Atkins’s stated view that the SEC should emphasize the quality rather than the quantity of enforcement actions. Even so, several aspects of the report indicate that the SEC has continued to focus on certain categories of misconduct. Half of all FY 2026 enforcement actions involved issuer reporting and disclosure allegations, matching the highest proportion recorded in the database. The report also found that actions naming individual defendants accounted for the highest percentage of cases seen in the last decade. That finding is consistent with the SEC’s FY 2026 enforcement results, which noted that two-thirds of all standalone enforcement actions filed during the year included charges against at least one individual, reflecting the agency’s continuing emphasis on accountability and deterrence.
The Cornerstone report also sheds further light on the SEC’s current priorities, including its continued focus on financial reporting, disclosure issues, and individual accountability, even as overall enforcement activity directed at public companies has fallen dramatically. For public companies and their insurers, the findings underscore how significantly the federal securities enforcement environment has changed in a relatively short period of time.
Yet the Cornerstone report’s findings also raise an important question. If, as Chairman Paul S. Atkins has suggested, enforcement statistics alone are not the most telling measure of market oversight and accountability, does the dramatic decline in SEC enforcement activity necessarily mean corporate liability exposures have declined as well? As discussed below, several recent developments in private securities litigation suggest the answer may be no.
Indeed, as The D&O Diary readers know, several significant private litigation trends have continued to develop even as SEC enforcement activity has receded. Recent examples include the continuing wave of private-credit-related litigation, the surge in AI-related securities litigation, and the growing number market-manipulation-related securities lawsuits. These cases demonstrate that shareholder litigation continues to follow perceived disclosure failures, corporate governance concerns, and conflict-related issues regardless of whether regulators ultimately pursue enforcement action.
The D&O Diary has tracked 15 market-manipulation-related securities actions filed in 2026. This development is particularly striking when viewed alongside the Cornerstone findings. According to the report, market-manipulation allegations were not involved in any SEC enforcement actions against public companies or subsidiaries during FY 2026 and historically have represented only a small percentage of the agency’s public company enforcement docket. Yet plaintiffs’ lawyers have increasingly pursued market-manipulation theories in private litigation, particularly in cases involving China-based issuers and alleged stock-price inflation schemes. The trend is noteworthy because it demonstrates how plaintiff firms may seek to develop and pursue litigation theories even in areas where SEC public-company enforcement activity has been limited or entirely absent.
The divergence suggests that SEC enforcement statistics alone may provide an incomplete picture of corporate liability exposure. At least for now, a public company facing disclosure, valuation, governance, or conflict-of-interest allegations may be more likely to face a securities class action, derivative suit, or merger objection lawsuit than an SEC enforcement action. From a D&O underwriting perspective, that distinction may be increasingly important because private securities litigation can become a significant source of loss exposure, driven not only by potential settlements but also by substantial defense costs that can accrue over years of litigation. Accordingly, a decline in SEC enforcement activity does not necessarily translate into a corresponding reduction in D&O risk.
An important takeaway from the Cornerstone report may be that the sources of corporate liability exposure are changing rather than disappearing. Even as SEC enforcement actions against public companies have fallen to historic lows, private securities litigation continues to evolve through new theories, new defendants, and new categories of claims. For D&O underwriters, the challenge is not merely understanding how the enforcement environment is changing but recognizing that litigation risk increasingly may be driven by private plaintiffs rather than government regulators. While the public enforcement environment appears less active than it was only a few years ago, the broader D&O litigation environment remains dynamic and continues to present evolving sources of corporate and management liability exposure.