Each year in the last couple weeks of September, the flow of SEC Litigation Releases announcing new cases filed by the Enforcement Division seems to turn from a slow but steady drip to a firehose blast. This year has been no exception, as the chart above indicates. By my quick count, after averaging just under 35 litigation releases per month for the first eight months of 2008, the SEC cranked out 66 litigation releases in September 2008, the most of any month this year.

Why is this? Is the SEC just tanned, rested and ready at the end of summer? Or maybe it's that the staff finally has their kids back in school and now they can get back to business? No, the answer here lies in one of the key metrics the SEC is judged on by the media, Congress and others, as well as the calendar.

First, the number of enforcement actions the SEC brings (sometimes referred to internally as its "stats") is one of the metrics that is carefully watched by the SEC and others each year. Sometimes that number goes up year-to-year and sometimes it goes down, but it is a quantifiable data point that can be used to compare the SEC's efforts over time.

According to my research, the number of enforcement actions filed each year since 2001 is as follows:

2001: 4842002: 5982003: 6792004: 6392005: 6302006: 5742007: 656

When the number of cases goes up, the SEC often trumpets the increase as evidence of its increased vigilance for investors. When the number of cases goes down, however, the media reflexively asks whether the SEC has gone "lax" (see a sample here), while the SEC goes into full spin mode to find the silver lining. For instance, when the number of cases dropped in 2004, then-Chairman William Donaldson turned lemons into lemonade, stating that the decline was “encouraging" as it showed that the SEC's crackdown on corporate crime was having an effect on executive behavior. Of course, as this 2004 article states, "Donaldson was quick to add that it was too early for the SEC to declare victory in the war on corporate corruption."

Either way, the number of SEC enforcement cases is scrutinized closely by the the world each year, which takes us to the second piece of this: the calendar. The SEC is on a fiscal year that ends September 30. Accordingly, any cases it files on or before September 30 are included in the current year's count, while cases it files on October 1 or later are carried over to the next year. So next September when you see the SEC's litigation releases about its new cases once again start to furiously pop up in the last weeks of September, you will understand why.

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