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The U.S. Securities and Exchange Commission announced Friday it had dismissed 42 pending enforcement cases after discovering enforcement staff had improper access to materials meant for commission officials ruling on those cases.

The decision comes after the SEC concluded a lengthy review of a matter first raised in April 2022, when it disclosed that some of its databases had inadvertently allowed SEC enforcement staff to view legal materials meant for officials with its in-house court.

The enforcement and in-house ruling arms of the SEC are supposed to be kept completely separate from each other regarding such matters. In a statement, the SEC it regretted the lapse and was committed to fixing it.

The SEC described the improper access as effectively an accident, as administrative staff in its enforcement arm worked to track and collect all relevant materials, but some databases were not appropriately safeguarded to wall off adjudication materials. It added that in most cases, the problematic materials were not uploaded to enforcement staff until after a decision had been handed down.

An internal SEC review found that there was no evidence that the improper access had any effect on decisions made by either enforcement staff or officials reviewing those cases, according to SEC officials.

Nonetheless, the agency decided to dismiss all pending cases, primarily against individuals and smaller firms, who were impacted by the improper access. The SEC also said it was agreeing to lift industry bans on 48 people who had petitioned the SEC for that relief whose cases were also involved in the mistake.

Copyright 2023 Thompson/Reuters