5 Questions with Stephen Choi and David Marcus: Securities Enforcement Empirical Database

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A periodic feature by Cornerstone Research, in which our affiliated experts, senior advisors, and professionals, talk about their research and findings.

We interview Stephen Choi, NYU Professor of Law and Director of the Pollack Center for Law & Business, and David Marcus of Cornerstone Research  to gain their insights on the database and the information that the Securities Enforcement Empirical Database (SEED) can provide to legal professionals and researchers.

How did the idea for the Securities Enforcement Empirical Database (SEED) come about?

Choi: In my research, I have done extensive searches for SEC enforcement data where I relied on the Commission’s news releases and complaints. This research was extremely cumbersome. I thought it would be significantly easier if someone devised a framework allowing attorneys and academic researchers to easily access this data. Through the Pollack Center, I approached Cornerstone Research with the idea of creating a database that would be of value to both the legal and academic communities.

What kind of data are available in SEED?

Choi: SEED is a comprehensive tool that is searchable, regularly updated, and verified. It allows for many types of searches on SEC enforcement actions. The variables that the database tracks include defendant names and types, alleged violations, venues, and resolutions. The database also includes additional information that is available only to academic scholars. We think SEED will also become a standard resource for those working in corporate law and corporate governance.

Marcus: When we launched in 2015, SEED only contained data on actions against public companies. As part of SEED’s continuing expansion, it now includes data on actions against subsidiaries of public companies, particularly important in the financial institutions litigation space. The Pollack Center and Cornerstone Research regularly issue reports using this data to analyze SEC actions by allegation, enforcement venue, settlement timing, monetary settlements, and defendant cooperation, for example.

How can legal professionals and academic researchers gain specific information from SEED?

Choi: One of the most useful features of SEED is that it enables a lawyer or other interested party to drill down into enforcement actions and compare the results of those actions to a case on which she or he is currently focused. For example, the database can be used to see what types of conduct has triggered SEC enforcement actions.

What can we learn from SEED that would be relevant to the ongoing debate over the SEC’s so-called “home-field advantage” with its own administrative court and administrative law judges (ALJs)?

Marcus: SEED allows us to compile reports on the SEC’s choice of venue—for example, we know that in 2010, about a third of SEC-initiated actions against public company–related defendants were filed as administrative proceedings, rather than in federal district court. The SEC is now filing the overwhelming majority of these actions as administrative proceedings.

SEED also contains data on each action initiated against a public company or its subsidiary. A researcher or attorney can go into the database, look at each action, and see whether the SEC filed it as an administrative proceeding or a federal court case. This is information that SEED can provide now, and we expect that in the future, the analytical abilities will become even more robust.

What are your plans for SEED going forward?

Choi: One of our goals going forward will be to engage more NYU School of Law and NYU Stern School of Business students in using SEED for their research. Many of them have already launched their own projects based on SEED and we’re interested in seeing what information and analyses they highlight in the near-term and further down the road.

Currently, the database focuses on public companies and their subsidiaries. However, since the SEC often brings related actions against non-public companies and individuals together with its public company actions, we want to expand the database to include these individuals and non-public companies. We also plan to widen the type of research that we conduct, based on this data—individual SEC attorney involvement and enforcement outcomes, to provide just one example.

Finally, we hope that academic scholars will make use of the data to conduct their own analyses, and perhaps add on to it, creating an even more robust and valuable tool.

Marcus: One of the key differences that SEED makes is that attorneys and researchers now have a much clearer and more comprehensive view of SEC actions against public company–related defendants from FY 2010 to the most recent fiscal year. This is extremely useful both for law firms involved in current SEC actions who want to inform their clients about how the Commission handled similar cases in the recent past, and for researchers who want to track larger trends in regulatory enforcement of securities matters.

About SEED

The Securities Enforcement Empirical Database (SEED), created by the NYU Pollack Center for Law & Business in cooperation with Cornerstone Research, is a first-of-its-kind resource that tracks and records information on U.S. Securities and Exchange Commission enforcement actions against public companies and their subsidiaries, dating back to October 1, 2009. SEED has garnered significant media attention, with major publications including the Wall Street Journal, Bloomberg Law, and the Financial Times utilizing its data in their reporting on SEC enforcement and related issues.

Interviewees

Stephen Choi

Bernard Petrie Professor of Law and Business,
School of Law;
Director, Pollack Center for Law & Business;
New York University

  • Boston

David F. Marcus

Senior Vice President