Like a double rainbow, a record number of SEC enforcement actions brought in a single year must mean something. But what? "What does it mean?!"

For a while there, it looked like the SEC wanted to de-emphasize its long-time metric of the number of cases filed year-to-year. In May 2009, shortly after he joined the SEC as director of enforcement, Robert Khuzami testified before the U.S. Senate that one of the first questions he wanted to address was whether the SEC could “de-emphasize the current quantitative metrics used to evaluate personnel and programs—the number of cases opened and the number of cases filed—in favor of a more qualitative standard, which includes concepts like timeliness, programmatic significance, and deterrent effect of a case.” Indeed, as discussed here, there are numerous gaping holes in the notion that one can measure the success of the SEC enforcement program by simply counting up all of the actions brought during the year.

But that was then, and now that the SEC has brought a record number of enforcement actions in its fiscal year 2011, the agency wants to get the word out! In a press release issued today, the SEC announced that the agency filed a record 735 enforcement actions in FY 2011. "This record number," the SEC said, "includes many cases involving highly complex products, transactions, and market practices, including those related to the financial crisis as well as insider trading by market professionals." The SEC attributed the record number of cases to the significant reorganization of the Enforcement Division in 2008 and 2009.

SEC Chairman Mary Schapiro stated that she was proud of the Enforcement Division's many talented professionals, and said that "we continue to build an unmatched record of holding wrongdoers accountable and returning money to harmed investors.” Khuzami added that this "record-breaking performance" was a response to Chairman Schapiro's leadership in a time of "resource constraints. This remarkable accomplishment has its roots in the talent, grit, and determination of the staff, as well as their creativity and willingness to consider new tools and approaches to stopping and deterring fraud and misconduct.”

What does a count of the number of enforcement actions in a year--even a record number--really mean in terms of evaluating the SEC's performance? As I've said before, I'm not sure it means that much at all.

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