The Securities and Exchange Commission, under fire from some members of Congress and the legal profession, vaunted its policing activities during the past year at a rare news conference yesterday.
"It was a hell of an accomplishment," SEC Chairman John S.R. Shad said, noting that actions brought by its enforcement division increased 42 percent while budget restrictions cut staff time devoted to those actions by 12 percent.
SEC critics have said the agency sides too often with business management and goes after little guys instead of big corporate crooks.
In response to charges that it is spending a disproportionate amount of time on insider trading at the expense of corporation violations, Shad and John M. Fedders, director of the enforcement division, ordered a computerized analysis of enforcement actions for the fiscal year ending in September. The analysis, the first such that the SEC has done, showed that 73 percent of the cases involved actions against broker-dealers and corporations for fraud and other errors in distributing securities.
Just 8 percent of the cases dealt with insider trading, the practice of illegally using information not available to the public to make profits.
Of the 252 cases initiated, only 20 involved insider trading. Few as they are, they demand about 20 percent of the division's time, the SEC officials said. Since 1978, 50 such cases have been brought, compared with 36 in all the years since 1934.
"The clear bulge in insider trading in recent times is due to the rash of major tender offers; it is a very appealing area for illegal activity," Shad said.
The House Commerce subcommittee on oversight and investigations will conduct hearings on the issue during the lame duck session. A committee staffer said yesterday, "The quantity may be up, but the quality of enforcement cases is down."